Abstract: In the past two decades, common ownership has increased tremendously in domestic and foreign capital markets and received intense attention from the academic. Prior research mainly focuses on common ownership of institutional investors, but hardly examines the impact of controlling shareholders' common ownership. Based on this, this paper uses the sample data of annual observations of nonstate-owned A-share listed companies to empirically test the related economic impact of controlling shareholders' common ownership on corporate strategy and the underlying mechanism. The results show that:(1) controlling shareholders' common ownership significantly increases corporate strategic radicalization; (2) the positive impact of controlling shareholders' common ownership on corporate strategic radicalization is more pronounced for firms with low institutional ownership and regions with low degree of marketization. The mechanism test show that controlling shareholders increase corporate strategic radicalization only when they hold common ownership of firms in different industries and lower ownership of controlling firms, which supports the risk dispersion mechanism. Consistent with the expectation of the financing constraint mechanism, controlling shareholders' common ownership significantly reduces the degree of financing constraint. In addition, controlling shareholders' common ownership increases corporate innovation and market expansion tendency, thereby enhancing corporate strategic radicalization.

Key words: common ownership, controlling shareholders, strategic radicalization, risk dispersion, financing constraint