The Cross Holding of Company Shares: A Preliminary Legal Study of Japan and China

18 Pages Posted: 2 Jun 2010

See all articles by Shinksuke Yakura

Shinksuke Yakura

Paul, Hastings, Janofsky & Walker, LLP - Tokyo Office

Li Guo

Peking University Law School

Date Written: June 1, 2010

Abstract

Cross shareholding is a practice whereby pairs of companies exchange holding of shares in each other. It is vitally important to recognize that cross shareholding has both positive and negative effects, the latter of which demand particular scrutiny. This paper tries to suggest a possible framework for the regulation of cross shareholding in China, by mainly applying the lessons and implications from the experiences of Japan, Where cross-holding has contributed to the spike and collapse of its economy. Currency appreciation, accounting rules changes, plus capital market restructuring, are putting China in the similar shoes. Targeting at different situation, a spectrum of rules has been proposed.

Keywords: Cross-holding, Company Capital Structure, Corporate Governance, Capital Market, Parent-Subsidiary Conglomerate

Suggested Citation

Yakura, Shinksuke and Guo, Li, The Cross Holding of Company Shares: A Preliminary Legal Study of Japan and China (June 1, 2010). Available at SSRN: https://ssrn.com/abstract=1618688 or http://dx.doi.org/10.2139/ssrn.1618688

Shinksuke Yakura

Paul, Hastings, Janofsky & Walker, LLP - Tokyo Office ( email )

Tokyo, 107-6034
Japan

Li Guo (Contact Author)

Peking University Law School ( email )

Room 613, Chenming Building
Haidian District
Beijing, 100871
China

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