Audit Quality,Pledge Of Controlling Stockholders' Shares And Overinvestment

Since 2013,the Shanghai and Shenzhen Stock Exchanges have successively launched the business of stock pledge repurchase.The operation is simple and the liquidity is the advantage of equity pledge financing.Therefore,the way of financing through equity pledge is gradually favored by the controlling shareholders.According to the wind database,the scale of equity pledges is growing rapidly.From 2012 to 2016,the annual equity pledge scale is more than 25 percent,and the number of listed companies with equity pledge in 2016 reached 1,595.This is an increase of 14.5%compared to 2015.It can be seen that the equity pledge to financial institutions or third parties has formed a new normal in the capital market.However,although equity pledges have many advantages,we cannot ignore the economic consequences of such a widespread and high percentage of controlling shareholder pledges.Through the research on domestic and foreign literatures,the existing research on pledge behavior mainly comes from the agency problem of equity pledge,corporate governance issues and market reaction after equity pledge.This paper studies how the controlling shareholder pledge affects the company's investment decisions and enriches relevant literature.This paper takes the A-share listed companies listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange from 2007 to 2016 as the research sample of this paper,and conducts in-depth theoretical analysis and empirical test on the relationship between the controlling shareholder's equity pledge and over-investment.The paper also analyzes how audit quality affects the relationship between controlling shareholder pledge and over-investment.The regression results show that there is a positive correlation between the controlling shareholder's equity pledge and the listed company's over-investment,and under the same conditions,the audit quality has a negative adjustment effect on the positive correlation between the controlling shareholder's equity pledge and the listed company's over-investment.This article mainly includes the following six chapters:The first part is the introduction.This chapter first introduces the research background of this paper,and then introduces the research significance of this paper,from the theoretical significance and practical value,and then combines the research ideas and research methods of this paper,and finally introduces the research content and framework of this paper,and Innovation.The second part is a literature review.This paper summarizes and reviews the literature review of the relationship between equity pledge,non-efficiency investment,controlling shareholder and investment efficiency,and audit quality and investment efficiency.First,the relevant literature on equity pledge begins with the agency problem of equity pledge,corporate governance issues,and market reaction after equity pledge.Second,non-efficiency investments are carried out in terms of the macro environment,the firm and its internal characteristics,and the heterogeneous nature of management.Then,it sorts out the relevant literature on the relationship between controlling shareholders and investment efficiency and the relationship between audit quality and investment efficiency.Finally,a brief review of the existing literature is carried out.The third part is the theoretical basis and research hypothesis.Firstly,it introduces the institutional background of equity pledge,including the type of pledge and the development status of equity pledge.The main content of this chapter is based on principal-agent theory,information asymmetry theory,signal transmission theory,superior order financing theory and free cash flow hypothesis,so as to propose the research hypothesis of this paper.The fourth part is the research design.The main contents of this chapter are as follows:First,the sample selection and data source are introduced,then the explanatory variables,interpreted variables and control variables are defined.Finally,the regression model is designed according to the proposed hypothesis.The fifth part is the empirical test and the result analysis.Firstly,the descriptive statistical analysis of the regression sample data was carried out,and the correlation coefficient between the variables was tested.Secondly,the regression analysis of the hypothesis proposed in this paper was carried out.Further,a robustness test was performed to verify that the above results were robust.The sixth part is the conclusions and recommendations of the study.This chapter first summarizes the research conclusions based on the above-mentioned contents,and then proposes relevant policy recommendations based on the research in this paper.Finally,the limitations of this paper and the future research directions are proposed.The innovations of this paper are as follows:First,the research on the economic consequences of the controlling shareholder's equity pledge is enriched.The literature on the economic consequences of the equity pledge of most controlling shareholders is mainly from the following aspects:the equity pledge brings The short-selling effect,the incentive effect brought by equity pledge and the equity pledge will reduce the company's earnings quality.This paper empirically studies the controlling shareholder's equity pledge and The relationship between over-investors has been studied and analyzed.It also enriches the research on the factors affecting over-investment.Secondly,this paper studies whether audit quality has a negative adjustment effect on the relationship between controlling shareholders' equity pledge and over-investment,and enriches the research on the role of audit quality.Based on the different auditing quality of accounting firms,this paper finds that using audit firms with high audit quality to conduct audits will have a significant negative adjustment effect on the positive correlation between controlling shareholders' equity pledge and over-investment.