Equity Pledge And Firm Innovation

Taking all listed companies in Shanghai and Shenzhen from 2003-2014 as a research sample,this paper examines the impact of shareholder equity pledge on enterprise innovation and its mechanism.The study found that the higher the proportion of equity pledge,the less the number and the lower the quality of enterprise innovation.Furthermore,when the external supervision is weaker,the equity pledge has a significant effect on enterprise innovation;At the same time,the higher the proportion of equity pledge,the more associated trading activities of listed companies,and the more serious the Capx occupation,indicating that the "interest appropriation effect" is the main mechanism of enterprise innovation decline caused by the pledge of controlling shareholders.This study not only enriches the literature of equity pledge and enterprise innovation,but also provides theoretical basis and policy inspiration for government departments to strengthen supervision of equity pledge.