Abstract: The paper studies the influence of cross-shareholding relationship of listed companies on share price linkage. By using QAP method, we conduct the analysis of regression through cross-shareholding relationship matrix and correlation coefficient matrix of share price established with the data of China’s listed companies. Empirical research indicates that cross-shareholding has regional effect and characteristics of industry diversification, and there exists an obvious positive correlation between cross-shareholding network relationship of listed companies and correlation coefficient matrix of share price earnings. It shows that enterprise connection network formed by cross-shareholding leads to share price linkage. Further research shows that cross-shareholding relationship controlled by the same major shareholder is less influential to share price linkage compared with simple cross-shareholding relationship. The paper holds the opinion that correctly knowing about the influence of cross-shareholding behavior on asset price is beneficial for investors to avoid risks efficiently. In addition, regulators should implement corresponding policies to guarantee the influence of cross-shareholding behavior on risk contagion in stock market and the steady development of securities market.
Keywords：Cross-shareholding, Share Price Linkage, Firm Network
source:Finance & Trade Economics ,No4,2014