Abstract
Cross-shareholding system, as an institutional innovation, has been played a positive role in organizing, coordinating and advancing the social economical development for about a half century. There is no doubt that cross shareholding has greatly accelerated the development of economic growth by enhancing the combination of business capital and the financial capital. Although there has been a period that cross shareholding was strongly criticized and restricted by government policy in some country, there is ample evidence that shows cross shareholding still actt as an important role in getting an advantage on the international competition. Under the current trend of economic globalization, an increasing amount of enterprises are constructing large joint enterprises or enterprise group unions by cross shareholding in order to gain an initiative in the global market. This dissertation first retrospected on the origins and developments of cross shareholding in different countries, by putting it into the ideological sphere cross shareholding was examinated from a macro perspective. Then theoretical analysis on the operational mechanism and economic consequences of cross shareholding was conducted from several perspectives respectively which include production function theory, contract theory, agent theory, institutional innovation theory and enterprises between network theory. Both the positive and negative effects of cross shareholding are illustrated in details. Accordingly empirical study which uses the panel data of cross shareholding of listed companies from 2007 to 2010 was conducted to reveal the actual characters of cross shareholding in China. Empirical study demonstrated that although the cross shareholding was significantly correlated with the market value of listed companies; it does not necessarily significantly correlated with the fundamentals of those companies. On the contrary, both the dummy variable of cross shareholding and the cross shareholding ratio are significantly correlated with the market value of listed companies. The dummy variable of cross shareholding and the company's market value Tobin Q are significantly and positively correlated at the confidence level of 5%, which illustrates that the market value of the cross-shareholdingcompanies are significantly higher than the market value of those companies which did not conduct crosssharehoding. Cross shareholding ratio and the company's market value is negatively correlation at the significance of 1%, which indicates that the market value of the listed company may decline as the cross shareholding ratio goes up. The study revealed that the purpose of the cross shareholding in the capital market in China is mainly speculative rather than strategic. Proper guidance of cross shareholding is urgently needed to promote it to play positive effects which will consequently lead to harmonious and healthy development of economy. Ample evidences of cross shareholding among multinational companies strongly demonstrated that cross shareholding is still bursting with vitality in the international competition. Finally, it was concluded that cross shareholding system will still play an important role in the process of the economic globalization. The significance on cross shareholding was highlighted and directions of further research were also suggested.