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On the topological properties of the cross-shareholding networks of listed companies in China: Taking shareholders’ cross-shareholding relationships into account

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  • Li, Huajiao
  • An, Haizhong
  • Gao, Xiangyun
  • Huang, Jiachen
  • Xu, Qun
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    Abstract

    Shareholders are the owners of listed companies, and their relationships can directly affect the structure of the stock market. In this paper, we analyze the topological properties and evolution of the cross-shareholding networks of listed companies in the past 5 years in China from 2007 to 2011, an infrequently considered topic, by taking shareholders’ cross-shareholding relationships into account. This analysis arrives at a deeper insight into the inner characteristics of China’s stock market. We find that the cross-shareholding networks of listed companies with shareholders’ cross-shareholding relationships display statistical features that reveal the stock market’s complex relationships more precisely. In particular, the results show that when the shareholders’ cross-shareholding relationships are considered, first, the In-degree and Out-degree of the cross-shareholding networks follow power-law distribution and the R2 of the linear regression analysis of the cumulative degree distribution is relatively higher; second, the modularity of the communities is larger; finally, both the number of members of top-ranked communities and the number of communities that have a large number of members are larger than those of which only considering the relationships between shareholders and listed companies are taken into account. Such cross-shareholding networks analysis taking shareholders’ cross-shareholding relations into account would be a helpful tool for supervisory departments and for stock market researchers to grasp the inner cross-shareholding relationships of listed companies in China, and it will be also helpful for the further researches about the “agent problems” in the stock markets from a whole point of view.

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    Bibliographic Info

    Article provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.

    Volume (Year): 406 (2014)
    Issue (Month): C ()
    Pages: 80-88

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    Handle: RePEc:eee:phsmap:v:406:y:2014:i:c:p:80-88

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    Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/

    Related research

    Keywords: Complex networks; Cross-shareholding networks; Power-law; Modularity; Community;

    References

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    1. Erik Dietzenbacher & Umed Temurshoev, 2008. "Ownership relations in the presence of cross-shareholding," Journal of Economics, Springer, vol. 95(3), pages 189-212, December.
    2. Randall Morck & Masao Nakamura, 1999. "Banks and Corporate Control in Japan," Journal of Finance, American Finance Association, vol. 54(1), pages 319-339, 02.
    3. López, Luis & A. Almendral, Juan & Sanjuán, Miguel A.F., 2003. "Complex networks and the WWW market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(3), pages 754-758.
    4. Sun, Peng Gang & Yang, Yang, 2013. "Methods to find community based on edge centrality," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(9), pages 1977-1988.
    5. Stefania Vitali & James B. Glattfelder & Stefano Battiston, 2011. "The network of global corporate control," Papers 1107.5728, arXiv.org, revised Sep 2011.
    6. D. Garlaschelli & M. I. Loffredo, 2004. "Fitness-dependent topological properties of the World Trade Web," Papers cond-mat/0403051, arXiv.org, revised Oct 2004.
    7. Huang, Wei-Qiang & Zhuang, Xin-Tian & Yao, Shuang, 2009. "A network analysis of the Chinese stock market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 388(14), pages 2956-2964.
    8. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
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