Share Cross-ownership Regulation and Stock Process: Evidence from the Chinese Market and Recommendations for Philippine and Vietnamese Law

Abstract

Cross-shareholding promotes price synchronization and reduces price lag. More importantly, this effect on price informativeness is evident for large companies and during market downturns. In general, the relationship between cross-ownership structure and stock price informativeness exists clearly. This paper investigates the impact of share cross-ownership on stock prices as a measure of price informativeness from companies listed on the Chinese stock exchange. The paper has learned an overview of cross-ownership and the stock market in China through jurisprudence analysis and comparative jurisprudence method. At the same time, the author also discusses the positive effects of regulation and cross-ownership structure on stock prices to better understand the relationship between cross-ownership and price dynamics through the impact of cross-ownership on the information environment. A notable point that the paper also discusses is the advantages of symmetric cross-ownership compared to the process of merger of joint stock companies to determine the balance between market efficiency and the social welfare loss brought about by symmetrical cross-ownership. From there, the paper will evaluate the influence of cross-ownership in Vietnamese and Philippine laws through agency theory and corporate governance models. Finally, make some recommendations for Philippine and Vietnamese laws.