Cross-shareholding, financing constraints and firm innovation efficiency

Abstract

Cross-shareholding by corporate subsidiaries and parent companies is a form of equity transaction within an enterprise group. This form of transaction can, to a certain extent, reduce the difficulty of corporate financing and improve the efficiency of corporate innovation. This paper analyzes the influence mechanism and effect of corporate sub-parent company cross-shareholding through a review of related theoretical and empirical studies, and conducts experimental research using instrumental variables, psm and other methods to eliminate endogeneity. The study's results indicate that cross-shareholding between corporate sub-parent companies positively affects corporate financing difficulties and innovation efficiency. The study also finds that there are some limitations and risks associated with its application, so enterprises should choose and use this form of transaction carefully in practice to maximize its potential advantages.