Risk Analysis Of Equity Pledge Of Controlling Shareholders Of Listed Companies

In recent years,with the development of the domestic capital market,the equity pledge activities of listed companies have become increasingly fierce.According to Wind statistics,as of December 31,2018,the market value of equity pledge is 5.58 trillion RMB,involving 2,211 listed companies,accounting for 62.1% of the total number of a-share companies,more than half of listed companies that carry out equity pledge.Since 2016,the equity pledge scale of listed companies has shown explosive growth,and some enterprises even have the situation of ultra-high proportion of equity pledge or full warehouse pledge.In the context of the increase of internal and external risks in the macro environment in 2018,some major shareholders of listed companies are faced with the risk of "exploding positions",and the risk of equity pledge presents a spiraling upward trend.For the actual controlling shareholders of listed companies,the equity pledge business is characterized by periodicity.When the stock price of the pledge continues to fall,financial institutions require shareholders to supplement the pledge when the stock falls to the warning line.At this time,in order to control their own risks,lenders may choose forced liquidation,resulting in the loss of the controlling shareholder’s actual control of the enterprise,which will convey pessimism to the market and further accelerate the decline of the stock price.Since October 2018,with the Shenzhen state-owned assets supervision and administration commission of $2.2 billion stake in listed companies,to improve the listed company’s equity pledge caused a liquidity crisis,local governments have issued a bail-out if necessary policy,dissolve the risk of equity pledge,high-profile equity pledge business in the market.This paper takes Shenwu Environmental Protection as the case study object,based on financing theory,control right theory and liquidity theory,through the analysis of the process of Shenwu Environmental Protection controlling shareholders’ equity pledge,thus explores the process of the problem of controlling shareholders’ equity pledge.In the case of external financing difficulty increases,the big shareholders equity pledge proportion is too high,stock prices continued to fall can cause the controlling shareholder loss of control of the enterprise,the company had to seek self-help shares were suspended,merger,acquisition and reorganization failureshare prices continue to slump,and caused a number of shares pledged repo,equity freeze,default debt default,credit rating and so on in a chain reaction.Through the study on the process and consequences of Shenwu Environmental Protection’s high proportion of equity pledge,the results show that the main reasons for the equity pledge risk of Shenwu Environmental Protection’s controlling shareholders are the equity pledge operation of performance compensation stocks and the increased difficulty of external financing caused by high proportion of equity pledge.By sorting out the chain reaction after the exposure of the equity pledge risk,this paper analyzes the consequences from the four aspects of control right transfer risk,stock forced liquidation risk,liquidity risk and risk of illegal default,and gives corresponding preventive measures.Through stake operations and actively participating in corporate governance both small and medium shareholders to control shifting risk,shares were suspended and additional collateral to stock forced to unwind risk,strengthen external financing and accounts receivable collection to improve solvency to liquidity risk,by improving internal governance and optimizing the equity structure to deal with the risk of default.After comprehensive analysis,it comes to the conclusion a the high proportion of equity pledge is more likely to cause liquidity risk.In the case of stock market crash,the higher the proportion of stock pledge is,the higher the risk will be.After the introduction of new rules on stock pledge,it will have a great impact on the high proportion of stock pledge companies.In the end,this paper puts forward some Suggestions for listed companies to prevent the risk of equity pledge,such as improving internal corporate governance,enhancing corporate value,improving the financing environment,relieving the risk of equity pledge through multiple channels of regulators,and increasing the punishment of illegal pledge,which have certain practical significance and reference value.In 2018,there are frequent regulatory policies,and risks are constantly exposed in the equity pledge financing business.Listed companies should increase risk prevention measures,reduce the closing events,and reduce the impact on enterprise value.