This actually can be an effective punishment. My sister-in-law did this when my two youngest step-nephews would be fighting with each other. As I understand it, they would stand there humiliated, holding each other’s hand, often squeezing. But it apparently did cut down on the fighting by making the alternative worse as far as the boys were concerned.
...But it apparently did cut down on the fighting....
Best way to cut down on the fighting is for the parents to ignore it. Fighting with siblings is normal, and it teaches kids how to work things out, and, ultimately, it makes them closer. Unless mommy or daddy gets involved.
Parents who jump in and ask dumb questions like, “Who started it?” are interfering in their children’s development.
On the rare occasions when my kids’ spats would escalate, my favorite comment was, “You’d better settle it before I do!” I have no idea of what I would have done to “settle it” because we never reached that stage, as the feud would end with one of them saying something like, “Okay, you can play with the ball, but I get to play with the truck, then.”