Stock Pledge, Information Asymmetry And Stock Price Crash Risk

In Chinese Enterprise market, due to the advantages of high equity liquidity and transparency, the stock pledge gradually formed the norm and popular financing channels. Previous studies have found that stock pledge has an impact on the performance of the company, and linked to the relationship between the performance of the listing Corporation and the stock price, we can speculate that the stock pledge and the stock price volatility is bound to have more or less contact. However, when the stock price volatility is too large, meaning that the stock price collapse occurs,will seriously damage the interests of investors, and even lead to the stock market turmoil, hinder the healthy and orderly development of the capital market. What factors lead to the risk of stock price collapse, and how to reduce the risk of stock price collapse are urgent problems which are need for theoretical and practical terms to answer.In view of this, we use the data of stock pledge in China’s A-share listed companies over the period of 2009-2013 to examine the impact of large shareholder equity pledge on the risk of stock price crash.. This paper found that: The stock pledge of large shareholders and stock price crash risk showed a significant positive correlation,which is for that the stock pledge of large shareholders strengthened the information asymmetry. The correlation between stock pledge and stock price crash risk has been strengthened in higher information asymmetry companies. This paper enrich the content of research on the economic consequences of the pledge of shares and stock crash risk causes, and provide inspiration to further standardize and improve the equity pledge system.