Institutional Investors?Stock Rights Pledging Of Blockholds And Firm's Value

With the characteristics of listed company's shareholding structure changed from equity decentralization to equity concentration,the research focus of scholars from various countries on corporate governance has also changed to the second type of agency problem,ie the agency problem between large shareholders and small and medium shareholders.Various studies have shown that in the case of concentrated ownership,major shareholders will use their special status to seize company assets through connected transactions,improper guarantees,etc.,and damage the interests of small and medium shareholders.How to protect the interests of small and medium shareholders has become the focus of corporate governance.In recent years,major shareholders have increasingly used equity pledges to raise funds.The scale of equity pledges of listed companies in China has also continued to rise rapidly,Almost every company's stock involves a pledge.As of September 2017,a total of 3,305 A-share listed companies in China's Shanghai and Shenzhen stock markets pledged their shares,which accounted for 98.5% of all Ashares.Only less than 50 stocks in the entire market did not involve equity pledges.From the perspective of individual equity pledge ratio,the equity pledged by major shareholders often accounts for a high proportion of the total shares of listed companies,which is enough to form absolute control over listed companies.Does the general practice of equity pledges have an impact on the value of listed companies? Will it be another way for large shareholders to "Tunneling" listed companies?On the other hand,since the split share structure reform,China's institutional investors have developed rapidly,and the role of institutional investors has also been increasingly valued.Institutional investors have more expertise and relative information advantages than many dispersed minority shareholders,and because institutional investors hold large shares,they have the ability and motivation to participate in the governance of listed companies.Can institutional investors,as an effective governance power,restrict the aggressive behavior of large shareholders against listed companies,thereby increasing the value of the company?Based on the above background,this paper takes China's A-share listed company as the research object,and from 2010 to 2016 as the research period,uses empirical research methods to verify the influence of the shareholder's equity pledge on the value of listed companies firstly,then explore the role of institutional investors in corporate governance.The conclusions of this paper are as follows:(1)There is a significant negative correlation between the proportion of pledged shares of major shareholders and the value of listed companies.As major shareholders use equity pledge financing to meet their financing needs,it will not affect the controlling shareholder status of major shareholders.Therefore,major shareholders have a stronger incentive to satisfy their own interests by occupying company funds.When a large shareholder pledges an excessive proportion of the company's equity,it will also bring about the risk of the company's change of control,which is not conducive to the stability and development of the company.Therefore,the higher the proportion of major shareholders' pledge of equity,the lower the value of the company.(2)Institutional investors' shareholdings can effectively reduce the adverse impact of the shareholder's equity pledge on company value.In order to safeguard their own interests,institutional investors will actively participate in the governance of listed companies and actively supervise the behavior of major shareholders so as to effectively curb negative influences when major shareholders carry out large-scale equity pledge financing.The research in this paper expands the literature on corporate governance and equity pledges,and it has provided new ideas for regulatory departments to formulate relevant policies,including improving the company's internal governance system,restricting the behavior of pledges by large shareholders,and actively developing institutional investors.It is of great theoretical and practical significance.