This paper analyzes the effects of the cross equity investment, the business structure, and the regulation on cross equity investment within a corporate conglomerate. In equilibrium, the cross equity investment increases as the controlling shareholder can extract f perquisite more easily. The business structure of a conglomerate becomes more closely related as the potential synergy is larger. The conglomerate expands cross equity investment if the potential synergy is small, and emphasizes risk management otherwise. Perquisite not only directly hampers distributive fairness, but also indirectly improves allocative efficiency by mitigating agency problem of outside equity. Thus, the influence of the regulation on cross equity investment depends on the parameters of the model. Such regulation improves fairness without hampering efficiency if the potential synergy is sufficiently large.