Cross-shareholding network and internal control quality

Xuemei Qiu, Jiangtao Yan and Zhice Cheng

Applied Economics Letters, 2024, vol. 31, issue 16, 1574-1577

Abstract: This paper investigates the relationship between cross-shareholding networks and internal controls quality using a sample of all listed A-share firms in China during 2007–2020. We find that the higher the centrality of cross-shareholding networks, the lower the quality of internal control. This finding passes a series of robustness regressions. Moreover, we further test the influence channel of cross-shareholding on the internal control quality and find that the agency cost is the corresponding intermediary. That is, the cross-shareholding network increases the agency cost of the firm and thus reduces the quality of internal control.

Date: 2024
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DOI: 10.1080/13504851.2023.2203895

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