Analysis On The Motivation And Economic Consequences Of Controlling Shareholder's Equity Pledge

Due to the relatively simple procedures related to equity pledge and less restrictiveconditions,it is increasingly favored by the major shareholders of listed companies and has broadened their financing channels.In recent years,the A-share market continued to suffer from the crisis of equity pledge closing of major shareholders of listed companies.Although the equity pledge is a financing behavior of the shareholders of the listed company,it will bring a lot of risks once it faces the equity pledge crisis,which will affect the company's stock price,operating performance,and information disclosure.Therefore,it is hoped that it will help deepen investors' understanding of equity pledges,provide investors and shareholders of listed companies with protection against the risks associated with pledged equity,and provide some reference for regulators to regulate equity pledges.This thesis selects a listed company KINGSUN OPTO to study the motives and economic consequences of equity pledges by controlling shareholders.Firstly,the research background and significance of the topic are expounded,and the relevant literatures of domestic and foreign scholars are sorted out from the perspectives of the motives pledges and economic consequences of stockholders' equity.Secondly,it elaborated and analyzed the institutional background and related theories involved in this article.Thirdly,introduced the situation of equity pledge of the shareholders of KINGSUN,analyzed the change in the degree of separation of the two powers of the controlling shareholders before and after the equity pledge,and used the financial indicators to analyze the financial status of KINGSUN from2013 to 2017.Event analysis method was used to analyze the influence of the controlling shareholder's equity pledge on the stock price in the short term,and the Tobin Q is calculated to analyze the impact of the equity pledge on the market value of listed companies.Based on the previous case studies and summarizing the research conclusions of this paper,it is concluded that the long-term and frequent high-level equity pledge of the shareholder of KINGSUN led to an increase in the separation of control and cash flow rights.Judging from the short-term market reaction,the equity pledge of controlling shareholders will have a negative impact on KINGSUN's market value.In the long run,the high proportion and frequent equity pledge of controlling shareholders may easily lead to a series of risks,which in turn will have a negative impact on the operating performance and company value of listed companies.Finally,it was revealed that listed companies should improve the integrity and timeliness of the disclosure of equity pledge information and strengthen the control over the equity pledge of controlling shareholders.At the same time,the controlling shareholders and investors should pay more attention to and prevent the risks posed by the equity pledge,and strengthen the risk early warning of the behavior of equity pledge.