Equity Pledge Of Controlling Shareholders And Cost Stickiness

In recent years,the equity pledge has risen rapidly in China's capital market due to its wide range of objects and low loan costs.As China's economy enters the adjustment period,the volatility of the A-share market becomes larger,the instability of the pledge equity increases,and the risk of control transfer of the controlling shareholder's equity pledge is intensified.In the past two years,there have been many events about the stock price falling below the liquidation line.Then the equity was forced to liquidate by the institution.Therefore,the impact of controlling shareholder pledge on business decision-making has attracted more and more attention in the market and academic circles.On the other hand,China is in a critical period of new and old kinetic energy conversion.As cost advantages gradually disappear,cost management will become one of the core competitiveness of enterprises.Since the 21st century,the introduction of cost stickiness has broken the traditional theory of cost behavior.With the deepening of research on the field of cost stickiness,the"black box" of cost management behavior has been gradually opened,providing more theoretical basis for the cost management control and business decision-making of enterprises.Then,will the controlling shareholder's equity pledge affect the company's cost stickiness by affecting business decisions?What is the mechanism behind it?This paper cuts the controlling shareholder's equity pledge,based on the theory of control transfer risk and principal-agent,and takes the A-share manufacturing listed company in 2005-2017 as a sample to study the impact of cont:rolling shareholder pledge on the cost stickiness,and its role mechanism.Through empirical research,it is found that the equity pledge of the controlling shareholder of the listed company reduces the company's cost stickiness.The free cash flow and the degree of earnings management are the two mechanisms of the controlling shareholders' equity pledge affecting the cost stickiness.The controlling shareholder wants to prevent the risk of transfer of control,so increases the degree of earnings management and reducing the level of free cash flow(to prevent management inefficient investment)to maintain the stock price,resulting in lower cost stickiness.Through further research,it is found that the restraining effect of the controlling shareholder's equity pledge on the cost stickiness exists only in non-state-owned listed companies,and effective internal and external governance supervision can suppress this negative correlation.The possible contribution of this paper is:in the theoretical sense,this paper first studies the influence of controlling shareholder behavior on the company's cost management,and points out the mechanism behind it,enriching the research on the economic consequences of equity pledge and the cost-related field.On the one hand in practical terms,it can provide a certain theoretical basis for the regulatory authorities to regulate the controlling shareholder's equity pledge.On the other hand,it can provide certain guiding significance for the enterprise's control cost stickiness and cost management,thereby optimizing resource allocation,reducing waste,and realizing the long-term enterprise economic benefits.