The Controlling Shareholder's Equity Pledge And The Choice Of Earnings Management Mode

Because of its characteristics of strong liquidity,easy realisation,low financing cost and fast financing,equity pledge financing is favored by controlling shareholders,and equity pledge activities frequently occur.Although GEM listed companies raise funds through listing qualifications,there are still liquidity financing needs due to industry characteristics and life cycle growth,and equity pledges provide a new financing route for GEM listed companies.After the listed company's equity pledge acts,to maintain the stock price stability in order to reduce the risk of stock price decline,there will be positive earnings management incentives.Therefore,this paper studies the extent of controlling shareholder equity pledge and earnings management.The essence of equity pledge financing is debt financing with equity as pledge.Concerned about the equity pledge of listed companies on GEM,it is found that there are significant differences in the duration of pledges and the number of pledges of different companies,such as the frequent pledge of LeTV.And earnings management can be carried out in two ways:accrued earnings management and real earnings management.Therefore,further the characteristics of earnings management methods,costs,and the realization of the objectives of the controlling shareholder target the in-depth research and demonstration of the selection of equity pledged pledge period and continuous pledge and earnings management methods.This article enriches the research on the contents of equity pledges of controlling shareholders,and at the same time enhances the research on the choice of earnings management methods,which has certain significance.This paper uses the sample data of Shenzhen GEM listed companies from 2014 to2016,and adopts the literature research method,empirical test method,and comparative research method.Based on the systematic review of the relevant existing research results,first of all,the equity of the controlling shareholders Pledge and earnings management related theories and the mechanism of the relationship between the two are analyzed,and put forward corresponding research hypotheses;then the empirical research method is used to draw the conclusion: the controlling company shares pledged the company's equity compared with the company without equity pledged company,the surplus The degree of management is higher;the degree of surplus management of the same listed company in adopting the equity pledge is higher than that of the period of non-equity pledge;in the sample of equity pledge,the relationship between pledge period andearnings management and method selection is studied;For equity-listed companies with a maturity of more than one year,the earnings management method shifts from accrued earnings management to real earnings management.In the case of listed companies controlled by the controlling shareholder who have continuous equity pledges,the earnings management method shifts from accrued earnings management to real surpluses management.This proves the influence of the controlling shareholder's equity pledge period and continuous pledge on the choice of earnings management methods.The theoretical analysis of this paper provides a new perspective for capital market participants to understand the relationship between the financial behaviors of controlling shareholders and the earnings management behaviors of the listed companies on the GEM,and is of significance for strengthening the supervision of the equity pledge of large shareholders,and it is also helpful for market investors.The pledge concerned with the controlling shareholder's stock pledged the quality of the earnings report of the listed company.At the same time,it is recommended that the pledge(banks and other financial institutions),investors,and government regulatory agencies pay attention to and regulate the behavior of equity pledge of the controlling shareholder so as to ensure that the interest of the stakeholders is not damaged.