The Relationship Between Controlling Shareholders Restricted Stock Pledged And Expropriation

This paper analyzes the influence of the controlling shareholder's restricted share pledge on the expropriation.Pledge of stock rights is popular because of its easy financing features,according to statistics,almost all the listed companies have pledged their stock rights,there are 3463 listed companies have pledged their stock rights,accounting for 99.23% of the market,they have pledged 581.276 billion shares,the market value is worth about 5.64 trillion yuan.Among them,the pledge ratio of the restricted stock accounted for 44.07% of all pledged shares.The value of the pledged stock is affected by the fluctuation of the stock price.When the share price falls close to the level,if the controlling shareholder fails to fill the position in time,it will be confronted with the crisis of the lost of control.However,if the controlling shareholder pledged the restricted shares,the risks of control transfer caused by trading the restricted stock.Because the restricted stock cannot be traded on the secondary market during the restricted period,the pledgee can't trade the restricted stock,the risk of control transfer is smaller.Facing smaller risk of control transfer,the cost of expropriation is lower.Furthermore,the controlling shareholder still retains control of the listed company after pledged his stock rights,it may strengthen the controlling shareholder's mobility of expropriation.Next,the controlling shareholder pledges restricted stock may be a kind of disguised reducing holding-shares,after pledged the restricted stock,the controlling shareholder may try its best to do expropriation,regardless the loss of the value of the company and the poverty of the investors.Therefore,it is significant to find the solutions.State-owned enterprises generally has better internal management system,state-owned assets by the possibility of occupation is not high,the possibility of controlling shareholders in state-owned enterprises do expropriation is lower.;Auditing is a powerful and effective external governance mechanism.Under high quality auditing,the controlling shareholder is under pressure to reduce the encroachment of interests.Therefore,it is very important for the empirical test to analyze whether the property and audit quality have the influence on the relationship controlling shareholder restricted stock pledged and the expropriation.Based on the data of A-share listed companies in China from 2007 to 2016,the empirical analysis of the relationship of controlling shareholders restricted stock pledged and the expropriation,and the impact of property and auditing quality on the relationship,the following research conclusions:(1)The controlling shareholder carries out the restricted stock pledging,which is more likely to tunnel the listed company and encroach on the interests of minority shareholders.(2)Compared with the controlling shareholders of non-state-owned enterprises,the controlling shareholders of state-owned enterprises restricted stock pledged,which is less likely to tunnel listed companies and encroach on the interests of minority shareholders.(3)The listed company that receives high quality audit shall be less likely to carry out the interest expropriation after the controlling shareholder pledged restricted stock.On the basis of the empirical test,the robustness test is carried out with PSM,2SLS and changing the variable measure,the conclusion is the same.The possible innovation points and main contributions of this paper are:(1)In the past,the research of stock pledged did not consider the particularity of restricted stock,this paper will be divided into the type of the controlling shareholder the restricted shares pledged and the normal stock pledged,focuses on the relationship of controlling shareholders restricted shares pledged and the expropriation.(2)The relevant studies of restricted stock,focused on the motivation of controlling shareholders behavior and economic consequences after the restricted stock lift a ban,this paper considers the controlling shareholder restricted stock pledged may be a kind of disguised reducing holding-shares,on the basis of the analysis of the impact of controlling shareholders related behavior.(3)This paper analyses the different of the property rights of listed companies and auditing quality,is likely to have impact on the relationship between the controlling shareholder restricted stock pledged and the expropriation,explore the factors which can restrain the encroachment of the controlling shareholders.According to the empirical test results,it is concluded that the following enlightenment: relevant laws and regulations are not perfect,the limitation on the controlling shareholders restricted stock pledged is not in place,the controlling shareholder remains the ability to control and influence the listed company after controlling shareholders restricted stock pledged,and the cost of expropriation is lower,all these can strengthen the mobility of expropriation.Whether the state-owned enterprises are bound by relevant laws and regulations,external regulatory powers,or the advantages of internal governance mechanism,the controlling shareholders can not do expropriation through the restricted stock pledge,the possibility of expropriation is lower.High auditing quality effectively suppresses controlling shareholder benefit expropriation behavior through restricted stock pledged,the controlling shareholder's behavior has been effectively external regulation,illustrate the auditing as an external governance mechanism has played a good governance.