The bright side of cross ownership: Evidence from the corporate resilience to COVID‐19 crisis in China

Yihui Chen, Xin He and Haoyuan Wei

International Review of Finance, 2025, vol. 25, issue 1

Abstract: We investigate the impact of cross ownership on corporate resilience around the COVID‐19 pandemic in the Chinese financial market. We show that firms with greater cross ownership experience higher corporate resilience, evidenced by a milder reduction in revenue during the COVID‐19 pandemic and a faster recovery in revenue afterwards. This effect is more pronounced for firms in high‐tech industries and large firms, firms in regions severely hit by the pandemic, and regions with better commercial credit environments. We argue that cross ownership improves the financing resources, corporate governance, and information acquisition, which enhances corporate resilience in the presence of the pandemic. Consistent with this notion, we find that firms with greater cross ownership have higher financing flexibility, fewer agency problems, and less information asymmetry during the COVID‐19 pandemic.

Date: 2025
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