The external effect of institutional cross-ownership on excessive managerial perks

Based on the objective of portfolio value maximization, this paper focuses on the external effect of institutional cross-ownership. Empirical results show that institutional cross-ownership is negatively related to excessive managerial perks and the negative relation is more prominent for stateowned enterprises (SOEs), or central SOEs. The main conclusions are unchanged when we perform endogeneity tests and several robust checks. Further, we conduct estimations on influence mechanisms and find that institutional cross-ownership can reduce excessive managerial perks through improving information environment and corporate governance. Especially, listed firms with institutional cross-ownership can achieve better future performance. Overall, this paper enriches existing literature on institutional cross-ownership and inspires a new direction to deepen discussions on SOEs' reforms in China.