owns stock in another publicly-traded company. So, technically, listed corporations own securities issued by other listed corporations. Cross holding can lead to double-counting, whereby the equity of each company is counted twice when determining value, which can result in estimating the wrong value of the two companies.
KEY TAKEAWAYS
Cross holding happens when a publicly-traded company owns a stake in another publicly-traded company.
The biggest issue with cross-holding is that the value of equity for each company is double-counted, leading to a wrong valuation.
Critics also argue cross-holding hinders the effort to improve corporate governance and hold management teams accountable.
How Cross Holding Works
Companies that have cross-holdings, also known as cross-shareholdings, are susceptible to confusion and management holdout in cases of company mergers and acquisitions (M&A) because one company might refuse consent to the other, and vice versa.
Markets in Britain and the U.S. have long enjoyed capitalism marked by a dispersed base of owners. In continental Europe, by contrast, ownership tends to be concentrated among a tight unit of insiders. The reasons differ from country to country. In France, it’s a combination of the state's wish to see big business in friendly hands and the lack of institutional investors.
[tex] → [/tex]A cross holding is a security that one public company issued but another company in the same listing owns it. In other words, imagine there are two public companies whose shares trade on the same stoke exchange. One company owns shares in the other. Cross holding refers to those shares
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Answer:
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Explanation:
owns stock in another publicly-traded company. So, technically, listed corporations own securities issued by other listed corporations. Cross holding can lead to double-counting, whereby the equity of each company is counted twice when determining value, which can result in estimating the wrong value of the two companies.
KEY TAKEAWAYS
Cross holding happens when a publicly-traded company owns a stake in another publicly-traded company.
The biggest issue with cross-holding is that the value of equity for each company is double-counted, leading to a wrong valuation.
Critics also argue cross-holding hinders the effort to improve corporate governance and hold management teams accountable.
How Cross Holding Works
Companies that have cross-holdings, also known as cross-shareholdings, are susceptible to confusion and management holdout in cases of company mergers and acquisitions (M&A) because one company might refuse consent to the other, and vice versa.
Markets in Britain and the U.S. have long enjoyed capitalism marked by a dispersed base of owners. In continental Europe, by contrast, ownership tends to be concentrated among a tight unit of insiders. The reasons differ from country to country. In France, it’s a combination of the state's wish to see big business in friendly hands and the lack of institutional investors.
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[tex] → [/tex]A cross holding is a security that one public company issued but another company in the same listing owns it. In other words, imagine there are two public companies whose shares trade on the same stoke exchange. One company owns shares in the other. Cross holding refers to those shares
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