Research On The Major Shareholders’ Interest Encroachment Behavior Under Equity Pledge

In recent years,with the rapid development of my country’s capital market,equity pledge has been favored by more and more large shareholders due to its convenience and high liquidity advantages.There are two main reasons for the popularity of the equity pledge market in my country: one is that major shareholders can be exempt from the restriction of the stock rights sale period,and can refinance while maintaining control of the company;the second is that the equity of listed companies is on the market.The transaction is very convenient,and financial institutions are willing to carry out equity pledge business.At present,the phenomenon of equity pledge is very common.On the surface,it appears that the pledger has pledged the equity,but in fact it still holds the control of the company.Therefore,more and more major shareholders of listed companies choose equity pledges for financing.However,equity pledge will cause the separation of control rights and cash flow rights of major shareholders,and the higher the percentage of major shareholders’ equity pledge,the deeper the deviation between the two rights.The negative effect brought about by the separation of the two rights is that in order to obtain more private interests,large shareholders tend to take covert measures to encroach on the interests of the company and small and medium shareholders.This article selects Huayi Brothers,known as the "first share of China’s film and television inland" as the research object,to study the equity pledge behavior of major shareholders from the perspective of interest encroachment,and combines theories and cases to enrich my country’s equity pledges.the study.This article first introduces the background and significance of related topic selection,the current research status at home and abroad,research content and research methods,and expounds the related concepts and theoretical foundations involved.Subsequently,this article led to the Huayi Brothers case,introduced the company’s shareholding structure,equity pledge,the degree of separation of the two rights,and analyzed the motives of Huayi Brothers equity pledge in recent years.Secondly,it analyzes the main ways of profit encroachment in the pledge of Huayi Brothers’ major shareholders’ equity,which mainly include over-investment,high-premium mergers and acquisitions,the use of funds from related parties,and the cash out of shares.Finally,it analyzes the economic consequences of major shareholders’ equity pledge from the perspectives of corporate value and financial performance.In the end,it is concluded that a high proportion of equity pledges by major shareholders will increase the motivation of major shareholders to embezzle interests,and diversified methods of interest embezzlement will cause a decline in company value and financial performance.At the end of the article,it puts forward feasible suggestions from the internal corporate governance and external supervision,so as to minimize the risk of pledged shares of the major shareholders of listed companies to a certain extent.