Research On The Economic Consequences Of Controlling Shareholder's Stock Pledge In Film And Television Industry

With the strengthening trend of economic globalization,China's capital market is also constantly developing and improving.In recent years,as a new financing method,equity pledge with convenient procedures and low financing cost has been favored by shareholders of listed companies.As a pledge of rights,the pledgor(controlling shareholder)obtains funds from the pledgee(financial institution)with his own equity as the pledge subject matter,which makes the static equity turn from static to economic resources that can meet the development of the company or shareholders themselves.Reasonable and standardized play to the positive role of equity pledge can raise funds for the company's own business development and help optimize the allocation of social resources.But at the same time,because of the influence of the company's operating condition and stock price fluctuation,the pledged stock has the risk of being forced to liquidate by the pledgee because of the falling stock price,which leads to the transfer of the company's actual control rights.Moreover,because the pledge of shares aggravates the separation between control rights and cash flow rights,controlling shareholders may have the action of harming the interests of small and medium shareholders and changing the company's investment strategy.With the continuous promotion of industrial transformation and upgrading,the film and television industry to meet people's spiritual and cultural needs has been growing.By the end of 2017,China's total revenue of radio and television reached 607.221 billion yuan,and movie box office revenue reached 55.911 billion yuan,showing a vigorous development trend.However,due to the particularity of the production products,it is not easy to grasp the needs of consumer groups,the large demand for funds,the long period of return on investment,and the non-heavy assets as collateral,the pledge rate of major shareholders in the film and television industry is generally high.According to the third quarter report of 2018,the pledge rate of controlling shareholders' equity of three companies reaches 100%,and 11 pledges are made.The mortgage rate is over 80%.Therefore,a rational and comprehensive analysis of the economic consequences of equity pledge of Listed Companies in the film and television industry,on the one hand,can provide reasonable reference information for the investment decision-making of various stakeholders,at the same time,it is also of great significance to improve people's cultural literacy and promote the development of the national economy.In this paper,Huayi Brothers,a representative of the film and television industry,is selected as a case study.Supported by the control right theory,information asymmetry theory and principal-agent theory,the controlling shareholders' shares of Huayi Brothers are comprehensively analyzed from four perspectives: short-term market reaction,long-term financial performance,impact on the interests of minority shareholders and changes in company investment strategy.The economic consequences of the pledge of rights are found:(1)Investors' negative reaction to the pledge of shares is due to Huayi Brothers' unclear expression of financing purpose in the announcement of the pledge of shares,the different degree of information mastery between controlling shareholders and market investors,the dominant position of shareholders in information,and the inability of investors to understand the controlling shareholders' pledge,and then "vote with your feet".(2)With the gradual increase of the scale and proportion of equity pledge,Huayi Brothers' long-term financial performance shows a downward trend,because the controlling shareholders encroach on the company's interests,which has a negative impact on the company's development.(3)The impact of equity pledge on the interests of minority shareholders is manifested in the fact that Huayi Brothers' controlling shareholders avoid the risk of potential cash flow loss and reduce cash dividend distribution,which also aggravates the second agency problem and causes conflicts of interest between the controlling shareholders and the majority of minority shareholders.(4)While holding shareholders pledge their shares in a high proportion,in order to avoid the pressure of paying debts caused by the rapid fluctuation of stock prices,they will change the company's investment strategy,pursue short-term interests,choose projects with high risk,high return or high social concern to invest.However,due to the mistakes in investment decision-making,they can not achieve the purpose of boosting the company's performance,instead,they will further increase the investment strategy.It dramatizes the fluctuation of the company's operation.The full text consists of six chapters: Chapter 1 clarifies the research background and significance of the article,combs the research ideas,obtains the research framework,introduces the research methods,and points out the contribution points.In the second chapter,the literature review,combined with the research ideas of this paper,summarizes and comments on the success of domestic and foreign scholars' existing research on the economic consequences of equity pledge.The third chapter defines the relevant concepts of the article and introduces the theoretical basis of the full text.Chapter IV: Current situation analysis and institutional background,on the basis of the status quo of equity pledge in capital market,combined with the characteristics of the film and television industry itself,collate the status quo of equity pledge in the film and television industry.The fifth chapter is a case study.Through the study of Huayi Brothers' equity pledge,we have a deeper understanding of its economic consequences.Chapter Six summarizes the full text and draws the conclusion of this paper.Suggestions are put forward from the aspects of strengthening the construction of internal corporate governance mechanism,actively acting by regulatory authorities,improving laws and regulations.The main innovations of this paper are:(1)On the basis of summarizing the general situation of equity pledge in the capital market,combining with the characteristics of the film and television industry itself,this paper summarizes the current status of equity pledge in the film and television industry,and enriches the research results of equity pledge in the film and television industry.(2)From the perspective of investment risk,in view of the impact of equity pledge on the company's investment strategy,this paper enriches and supplements the research perspective.(3)The research on Huayi Brothers mainly focuses on the performance of M&A and the fulfillment of performance commitments.This paper analyses the equity pledge of its controlling shareholders to the company's property.