Influence And Restriction Mechanism Of Cross-Shareholding From The Perspective Of Corporate Governance

Cross-shareholding refers to a kind of equity state that the companies hold each other’s shares and become each other’s shareholders,and it often appears with specific purposes.Moreover,this equity status often involves various aspects such as the company’s capital operation,industrial layout,market value management,and related party transactions.However,this article mainly analyzes the nature,mechanism,and impact of cross-shareholding from the perspective of corporate governance.The cross-holding of specific purposes will have a certain effect on corporate governance.These effects are like “double-edged swords”,positive results are beneficial to the company,but the negative effects are even more striking.The previous Delong and the recent An bang incident should cause us to be cautious about cross-shareholding.Therefore,this article focuses more on the internal and external restriction mechanism of cross-shareholding from the perspective of risk prevention.This article consists of four chapters: The first chapter is an overview of cross-shareholdings.The first chapter is divided into three sections.The first section discriminates the concept of cross-shareholding,and points out that the cross-shareholdings we discuss should be a state of ownership structure with specific purposes.Section II analyzes the basic theory of cross-shareholdings.The author thanks that the company’s independent legal personality is the precondition for cross-shareholding,the company’s limited liability is the driving force for reinvestment and even cross-shareholding,and the agency issue of the company is the root cause of cross-shareholding problems.In the third section,the author classified the cross-shareholding according to different standards.The second chapter focuses on the process of cross-shareholding through company agency mechanisms affecting shareholders,managers and creditors.The first section mainly deals with the agency issues between shareholders and managers.Specifically,operators actually exercise the voting rights of corporate capital.It will cause the issue of “self-selection” and “mutual election” internally,and lead to external control market failure.These will eventually bring about the internal control of the company.Section II analyzes the agency problem between controlling shareholders and small and medium-sized shareholders.The author believes that the asymmetry between cash flow rights and control power actually breaks the principle of the Majority Rule making controlling shareholders are more motivated and capable of harming the interests of small and medium-sized shareholders.Section III describes the agency issues between shareholders and corporate creditors.Cross-shareholding may result in the falsification of registered capital.This is in contrast with countries that have more emphasis on statutory capital system,and it’s also the part where contradictions can easily be concentrated.The third chapter is a review of the development and restrictions of foreign cross-shareholding system.In the first section,this article talks about the cross-shareholding model from Japan’s general trading company in the 1950 s to economic bubble in the 1990 s.In addition,this article also introduced Japan’s main banking system.In the second quarter,this article analyzes the “principle-allowed”attitude of the United States to cross-shareholdings.This is mainly due to the fact that the United States is a country that adopts an authorized capital system,and popularizes the culture of board centralism and shareholders’ interests first.The developed direct financing market has also eased its antagonistic relationship with cross-shareholdings.In the third section,the article briefly introduced the provisions on cross-shareholdings in French and German law.The fourth chapter based on the analysis of the previous article elaborates how to limit the negative effects of cross-shareholding from the perspective of risk prevention.In the first section,the author defined the scope of the cross-shareholding restriction,namely it clears the restricted object of the cross-shareholding.In the second section,the author first discussed the existing system’s suppression of the negative effects of cross-shareholding.However,due to the existing restriction system insufficient to deal with the negative impact of cross-shareholding on China’s current corporate governance,the author analyzes the internal and external restrictions on cross-shareholding from the perspective of shareholders’ rights protection and creditor protection,on the premise of allowing cross-shareholding exceptions.