Discussion On The Financing Of Equity Pledge Of Controlling Shareholders—A Case Study Of Huishan Company Limited In Liaoning

As a new financing method,equity pledge has become one of the most popular financing methods.In recent years,the scale of equity pledges has gradually increased,and the pledge rate has also risen sharply.As of 2017,there were a total of 3483 A-share listed companies,and a total of 2052 listed companies had pledged their shares.The equity pledge financing shows a very strong development trend in China's capital market.The main participant of the equity pledge is the controlling shareholder.The equity pledge converts the static book equity into liquid capital,completes the recirculation of capital and resolves the shortage of funds faced by the company and its controlling shareholders.However,while the company and shareholders are getting the convenience of equity pledge financing,they also face the risk of equity pledge financing.Through the analysis of equity pledge financing cases,the motivation of controlling shareholder equity pledges and the economic consequences of equity pledges are studied.Attempts to propose solutions to the issue of equity pledges,it has important academic value and realistic meaning for the normative operation of the equity pledge in the future capital market.First of all,this article introduces the research background and significance of research,outlines the current situation of equity pledge financing in the capital market and the research results of domestic and foreign scholars.Secondly,by using the literature research method and the case data analysis method,this paper will use the theory of control rights,principal-agent theory and information asymmetry theory to analyze the motivation of Huishan Dairy Equity Pledge Financing.Through the analysis of Huishan Dairy's recent three years,the financial data and key financial indicators from the financial statements show the current situation and development history of Huishan Dairy's financial situation and equity pledge in recent years and analyze the process of Huishan Dairy's controlling shareholders' equity pledge financing.Third,this article will explore the economic consequences and causes of equity pledge financing.Through the analysis and summary of relevant documents at home and abroad,we can fully understand the main theory and reality of the economic consequences of the controlling shareholders pledge of stock rights,and lay a good theoretical foundation for the motivation and economic consequences of the research.Based on the actual case of equity pledge of controlling shareholder of Huishan Dairy,the analysis of the equity pledge of Huishan Dairy's controlling shareholder is closely related to a series of subsequent changes of the enterprise.The economic consequences of the controlling shareholder Huishan Dairy include accelerating the break of the capital chain and exacerbating the corporate finance Fraud,provide opportunities for the transfer of the interests of major shareholders and increase the risk of the stock price crash.The unfriendly motives of the management of the company,the lack of supervision by the regulatory authorities and the imperfect internal control system of the company are the causes of these adverse economic consequences.Finally,we propose solutions to the causes of the adverse economic consequences of equity pledge financing.The abnormally high equity pledge ratio often represents the rising risk of financing,as well as the risk of stock price collapse caused by financial pressures such as the decline in solvency.Huishan Dairy's stock price plummeted by 85% in a short period of time was shocking.However,behind the plunge in stock prices was a series of high-risk behaviors such as large-scale over-financing and large-scale centralized equity pledges by controlling shareholders,showing a high proportion of shares pledged risks.Therefore,combining the actual situation of this article,we propose the following countermeasures for the causes of adverse economic consequences: strengthen the external supervision of equity pledge,improve the corporate governance mechanism,and improve the internal control system.