Institutional Vertical Shareholding and Governance of Commercial Credit Distortions:Evidence from Supply Chain Level
Dredging the channels for capital to enter the real economy is a prerequisite for financial support for high-quality economic development.However,commercial credit distortions obstruct the capital transmission channel,result-ing in a structural contradiction of capital redundancy and capital shortage within the supply chain.Supported by the theory of common ownership,this paper investigates the role of institutional vertical shareholding in governing commer-cial credit distortions and provides new insights into revitalizing the precipitated funds in the supply chain.Firstly,based on the different manifestations of commercial credit distortions,this paper categorizes them into redundancy distortions,where commercial credit is detained in customer firms,and shortage distortions,where commercial credit is detained in supplier firms.Then,starting from the term decision of commercial credit,this paper constructs a research framework that encompasses both types of commercial credit distortions using the analytical method of evolutionary game theory,and elucidates its causes based on the disparity in credit financing costs.On this basis,the study further introduces common institutional shareholders to analyze the internal mechanism by which institutional vertical shareholding governs these dis-tortions.Finally,utilizing supply chain relationship data of"supplier firms-customer firms"from 2004 to 2022,this paper empirically examines the effect and mechanism of institutional vertical shareholding in managing the two types of com-mercial credit distortions at the supply chain level,and explores the governance boundaries based on asymmetric share-holding.Research indicates that institutional vertical shareholding can synergistically manage the two types of commercial credit distortions.Specifically,when supplier firms lack credit financing advantages,institutional vertical shareholding can reduce the commercial credit term to address redundancy distortions of commercial credit.Conversely,when supplier firms possess credit financing advantages,institutional vertical shareholding can extend the commercial credit term to ad-dress shortage distortions of commercial credit.Moreover,mechanism testing reveals a distinction in how institutional vertical shareholding manages these two types of distortions.In redundancy distortions,institutional vertical shareholding intervenes in the governance of customer firms through investor research and the appointment of directors,supervisors,and executives.In the case of shortage distortions,institutional vertical shareholding governs supplier firms via the same mechanisms.Additionally,institutional vertical shareholding provides trust compensation to private firms and non-main board firms,further extending the term of their commercial credit.Lastly,it is found that asymmetric shareholding consti-tutes a governance boundary for common institutional shareholders.This is evidenced by the tendency of institutional asymmetric vertical shareholding to allocate business credit resources to firms with higher shareholding ratios,thereby impeding the continued synergistic governance of both types of commercial credit distortions.Compared with existing studies,this paper has the following marginal contributions.First,it classifies commercial credit distortions into redundancy distortions and shortage distortions based on their manifestations,and elaborates their generating mechanisms within the same theoretical framework.This classification aids in analyzing the synergistic gover-nance mechanism of the two types of commercial credit distortions,providing a valuable supplement to the research on the causes of these distortions.Second,grounded in the benefit-sharing motive,the paper not only elucidates the internal mechanisms through which institutional vertical shareholding governs the two types of commercial credit distortions at a theoretical level but also provides empirical evidence from the supply chain perspective.Finally,the paper further investi-gates the supply chain role of institutional vertical shareholding in terms of intervention governance and trust compensa-tion,and explores the role boundary of common institutional shareholders in the context of asymmetric shareholding be-havior.In conclusion,this study contributes to a deeper understanding of the bilateral governance process influenced by institutional vertical shareholding in supply chain firms,providing valuable references for leveraging institutional vertical shareholding to activate idle capital in the supply chain.
Institutional Vertical ShareholdingCommon Ownership TheoryRedundancy Distortions of Commercial CreditShortage Distortions of Commercial Credit
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