Abstract
This article examines the impact of cross-shareholding on corporate environmental investment (Env) using Chinese listed firms from 2014 to 2019 as the research setting. The results show that there is a positive impact of cross-shareholding on corporate environmental investment. The finding remains robust to a battery of robustness checks. In addition, the heterogeneity analysis illustrates that the positive impact of cross-shareholding on corporate environmental investment is more pronounced in state-owned firms and high-polluting industries when compared to non-state-owned firms and low-polluting industries, respectively. This study extends the research on cross-shareholding and provides practical implications for corporate sustainable development.
Highlights
Inter-firm cross-shareholding is when two or more firms hold shares in each other’s firms, entailing a binding of financial interests
This article examines the impact of cross-shareholding on corporate environmental investment using Chinese listed companies from 2014 to 2019 as the research setting, and estimates the following regression
The results demonstrate that there is a positive and significant impact of cross-shareholding on corporate environmental investment across all regressions
Summary
Inter-firm cross-shareholding is when two or more firms hold shares in each other’s firms, entailing a binding of financial interests. Due to the increasing complexity and volatility of stock market, cross-shareholding has become a popular mode for listed companies in China to maintain their market competitiveness (Peng et al, 2019; Guo H. et al, 2021). The popularity of inter-firm cross-shareholding in China’s capital market is further fueled by the country’s vigorous shareholding reform, continuous stock market expansion, rising demand for capital operation, and the arbitrage motives of short-term capital flows (Peng et al, 2019). Environmental regulations, as a major part of China’s green development efforts, have compelled businesses to reduce the damage to the environment during their production process. Firms have an essential role in environmental protection, and corporate environmental investment is crucial to facilitating the green development of society (Li et al, 2021). Existing studies are concentrated around the impacts of policies and within-firm factors on corporate environmental investment
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