The Impact Of Concentration Of Pledge Of Shares On The Stock Price Of Listed Companies

In recent years,pledge of shares as a relatively fast and convenient method of funding has been favored by more and more listed companies.According to statistics,in 2017 a total of 3,431 listed companies' shares were pledged in the whole A-shares market,involving 568.1 billion shares,accounting for 10.86% of the total A-shares market,and the total market value of these shares was as high as 6.15 trillion yuan.However,the potential risks of pledge of shares are not well known to the public.As more and more listed companies' major shareholders pledge all their shares,the risk of pledge concentration caused by pledge of shares gradually becomes one of the most serious risks.When the listed companies' concentration of pledge is high,once the market has experienced a rapid decline,the listed company's shareholders have a risk of liquidation.If the pledgee cannot replenish the collateral in time,it will cause the stock price to fall further,leading to more difficult situation.In view of this,it is of practical significance to study the influence of the concentration of pledge of shares on the stock price of listed companies.Taking the Geo-Jade Petroleum Corporation as an example,this paper selects the representative pledge of shares incidents of Geo-Jade Petroleum Corporation as a sample,and then uses the Event Study to analyze the impact of pledge concentration on the stock price of listed companies.Firstly,this paper sorts out the relevant academic achievements on pledge of shares at home and abroad,and finds that the current research on the impact of pledge concentration on the stock price of listed companies is relatively rare.Secondly,this paper explains the related concepts of pledge concentration and other related theories about pledge of shares,and gives a brief introduction to the current situation of pledge of shares in China.Finally,this paper takes the Geo-Jade Petroleum Corporation as an example,analyzes the pledge of shares of the Geo-Jade Petroleum Corporation over the years,and selects some representative pledge events from two different perspectives: market concentration and concentration of financiers to explore the impact of pledge concentration on its stock price.The research results show that the pledge concentration has a significant impact on the stock price of listed companies,and the market concentration is more significant than the concentration of financiers.However,the effect of pledge concentration on listed companies is not clear.It is worth noting that the listed company intends to release good news around the announcement date of the pledge of shares to reduce the impact of the equity pledge on the company's stock price.According to the research results of the thesis,at the end of the paper,the author puts forward relevant suggestions on the status quo of pledge of shares in China from the perspectives of regulators,financial institutions and investors.