Controlling Shareholder's Equity Pledge,Internal Control Quality And Benefit Encroachment

Equity pledge is a common financing behavior,that is,shareholders will hold the equity pledge to a qualified institution to obtain funds and pay interest.It is a good way to raise money when the controlling shareholder is faced with capital constraint,but with the increasing frequency of equity pledge,the controlling shareholder's interests encroachment after pledge also occurs frequently.Relevant laws and regulations in China are not perfect enough for the mechanism of equity pledge.Therefore,it is an urgent problem to be solved how to restrain and restrain the interests encroachment and adverse effects of equity pledge of controlling shareholders from the perspective of listed companies themselves.First of all,this paper comprehensively sorted out the research conclusions of domestic and foreign literatures and the relevant theoretical basis,Under the guidance of the theoretical basis,it analyzed the influence mechanism between related variables.Secondly,relevant data of all a-shares from 2015 to 2018 were collected,ST and*ST companies and financial enterprises were excluded as research objects,and then hypotheses were proposed based on theoretical analysis.The hypotheses were verified by descriptive statistics,correlation test and regression analysis.Then,this paper takes zhongnan culture as the case company,and through analyzing the actual business of the case company,reveals the relationship between the pledge of shares of controlling shareholders and the encroaching of interests,as well as the regulating effect of internal control quality.According to the above research results,this paper draws the conclusions as follow:(1)the controlling shareholders will strengthen their motivation to seize the interests of the listed company under the pledge of stock rights.(2)the higher the pledge rate,the more obvious the expropriation of interests of controlling shareholders under the pledge of equity.(3)the improvement of the quality of internal control has a restraining effect on the expropriation of interests of controlling shareholders under the pledge of stock rights,and this effect is more obvious in the case of high pledge ratio.Finally,based on the above empirical results and case study conclusions,this paper puts forward relevant Suggestions,providing references for listed companies and market regulators on how to better play the financing convenience of equity pledge and at the same time to curb the expropriation of interests of controlling shareholders.