Blockholder Share-pledging And Enterprise M&A

Share-pledging has become a common phenomenon in the global capital markets.More than 95% of a-share listed companies have share-pledging,and the scale shows A rapid growth trend,once reaching the level of "no shares without pledge".Although some studies have focused on the economic consequences of controlling shareholders' share-pledging to enterprises,no unanimous conclusions have been drawn.Investigate its reason,on the one hand,share-pledging is belong to the big shareholders financial behavior of the individual,the share-pledging under different motives may lead to different economic consequences,on the other hand,the big shareholder's heterogeneity is objective existence,and the heterogeneity is inevitable that the big shareholders and decision-making,thereby further share-pledging after the economic consequences.Therefore,the research on share-pledging and its economic consequences should not only be carried out from the perspective of the homogeneity of share-pledging behavior,but should be carried out from the perspective of the heterogeneity of major shareholders as the subject of share-pledging and the difference of share-pledging motivation.As an important strategic decision of a company,merger and acquisition is a major measure for an enterprise to achieve scale expansion,promote resource allocation and enhance the value of the company,which has a great impact on the company's development and market value.However,in emerging markets where investor protection is relatively weak and listed companies with highly concentrated ownership,mergers and reorganizations through self-interested target selection,premium payment and related party transactions to grab private profits are very serious.Existing literature thought when the controlling shareholder share-pledging is easier to show the empty occupation and behavior,through mergers and acquisitions from a further implementation,for example,by increasing the number of corporate mergers and acquisitions increase share prices in the short term or the use of mergers and acquisitions for related party transactions provide convenience for its affiliated companies,or take up money to achieve the purpose of further hollowed listed companies.But is it true that the major shareholder's share-pledging is only the increase of M&A behavior and the aggravation of goodwill impairment? Is there any difference in the influence of share-pledging of major shareholders under different motivations on the selection of M&A projects,premium payment and goodwill impairment,or even whether it can create value for the enterprise? Does the existence of multiple major shareholders have a certain governance effect on the selection of M&A projects,premium payment and subsequent goodwill impairment based on the purpose of hollowing out? If so,through what channels?Therefore,this article is based on large shareholders share-pledging motive heterogeneity and the heterogeneity of large shareholders and large shareholders' behavior from three perspectives the impact on the enterprise M&A decision,on the principal-agent theory,signaling theory,value theory and efficiency theory as the foundation,try from the perspectives of the pledge motive and big shareholder's heterogeneity and discusses major shareholder share-pledging and the relationship between the enterprise mergers and acquisitions,and further discuss the difference of influence effect from the case of several major shareholders.The main conclusions are as follows:(1)This paper make an analysis of big shareholders equity motivation on account of large shareholders' heterogeneity,and find that big shareholders pledge funds for their own or other third party(non-supportive share-pledging)in more cases than for the listed company(supportive share-pledging).Secondly,compared with noncontrolling major shareholders,controlling shareholders' share-pledging accounts for a higher proportion,but non-controlling major shareholders' share-pledging volume is still large,so it is necessary to include it in the study.(2)The research explores the influencing effect of share-pledging on enterprise M&A under different pledge motivations,and finds that the supportive share-pledging of major shareholders can significantly inhibit enterprise M&A behavior,showing stronger governance effect,while non-supportive share-pledging of major shareholders shows preference for M&A behavior,showing stronger motivation to tunneling.For premium payment and excessive goodwill in the process of enterprise M&A,as well as the presence of goodwill impairments,big shareholders of supportive share-pledging did not show significant governance effect,while the major shareholder of nonsupportive significantly increase the possibility of M&A premiums payment,excess goodwill and the likelihood of goodwill impairments after the M&A.But for M&A performance,the major shareholder of non-supportive share-pledging will significantly improve short-term market performance of M&A projects,but is harmful to the enterprise's long-term financial performance.Besides,big shareholders of nonsupportive share-pledging do not show the governance effect of expectations.(3)Compared with non-controlling major shareholders,controlling shareholders have a stronger impact on M&A;compared with single pledge,joint pledge has stronger effect on M&A.(4)Further investigation on whether unpledged major shareholders will exert governance effect shows that unpledged major shareholders show governance effect on M&A through their influence on the tunneling behavior of pledged major shareholders.The innovations and contributions of this paper are as follows: First,this paper focuses on capturing the share-pledging motivation of major shareholders based on the use of share-pledging financing funds,which makes up for the deficiencies of existing literature on the use of share-pledging funds and pledge motivation.Existing literature study of share-pledging is mainly from the perspective of share-pledging homogeneity in its economic consequences,little literature focus on the motivation of big shareholders share-pledging,equity financing is the purpose of the actual reflection of the motivations of the pledge,according to the major shareholder share-pledging funds flowing into share-pledging can be divided into two categories,support type of sharepledging with the support type of share-pledging,The economic consequences of share-pledging under different motives are different for enterprises,which should be a prerequisite for the study of share-pledging related economic consequences.From the perspective of major shareholder's share-pledging motivation,this paper examines the impact of major shareholder's share-pledging on enterprise mergers and acquisitions,enriching the research on major shareholder's share-pledging motivation,and also providing an explanation for the inconsistent conclusions of existing research on the economic consequences of shareholder's share-pledging.At the same time,it can effectively strengthen the understanding of shareholders' motivation for share-pledging in practice,and further lay a foundation for share-pledging related research.Second,the differentiation of the heterogeneity of major shareholders provides a new perspective to explain shareholder share-pledging behavior and its economic consequences.In the past,researches were mostly carried out from the perspective of shareholder homogeneity.However,in fact,the assumption of shareholder homogeneity is flawed,and shareholder heterogeneity exists objectively,or shareholders are groups with different behavioral motivations and interest goals.This paper distinguishes the heterogeneity of share-pledging between controlling shareholders and non-controlling major shareholders,simultaneous pledge and single pledge,first pledge and additional pledge,and further analyzes the impact of sharepledging on M&A.The research based on the heterogeneity of major shareholders in this paper also provides a unique perspective to explain the phenomenon that the existing research on shareholder share-pledging behavior and its impact on enterprises has not reached a unanimous conclusion.Thirdly,this paper also enriches the research on corporate governance in the case of multiple major shareholders from the perspective of share-pledging and M&A.From the perspective of governance of multiple major shareholders,this paper finds that multiple major shareholders in enterprises can effectively exert governance effect,enhance the restraining effect of supportive share-pledging on M&A probability,M&A premium and goodwill impairment,and weaken the aggravating effect of non-supportive share-pledging on M&A probability,M&A premium and goodwill impairment.In addition,from the examination of two mechanisms of active voice and withdrawal threat,it is found that multiple major shareholders can effectively exert governance effect through these two mechanisms,and the two mechanisms are not an either-or relationship,enriching the literature in the field of governance mechanisms of multiple shareholders.