The Controlling Shareholder's Equity Pledge And Listed Company Risk Taking

During the last decade,stock pledge has emerged as an innovative way to facilitate debt financing,and the number of public firms with controlling shareholders involved in stock pledge has surged to 1372,which amount to 176.37 billion shares.Considering the significance of this new practice and the potential risks are now of great concern in China financial market,more comprehensive academic work is required on this issue.To find out the relationship of the stock pledge and corporate risk taking,is beneficial to enrich and promote the research of stock pledge in China.And it has very important for perfecting the supervision system of stock pledge,guiding and standardizing the pledge activity of controlling shareholder's equity,and protecting the interests of investors and avoiding the systemic financial risk.This paper uses a combination analysis method of normative and empirical.Firstly,we summarize the existing research systematically.Secondly,we analyzes the theory of the equity pledge of the controlling shareholder,the risk taking level of listed companies,the effect of equity balance and marketization degree to the relationship.According to the theory of the basis of the mentioned analysis,we propose the following hypothesis.Then,the author adopts the method of empirical research,uses all A-listed companies of China in 2007 and 2015 as the initial research samples to study whether the pledge of controlling shareholders will affect the risk of listed companies.And further explores the moderating effect among them,and uses substituting variables,instrumental variable to ensure the robustness of the result.The study found that the controlling shareholder equity pledge have significant positive relationship with corporate risk taking level,equity balance and the degree of marketization play a significantly negative role in the relationship.