Research On The Impact Of Controlling Shareholders' Equity Pledge On The Credit Rating Of Listed Companies

With the rapid development of China's capital market,the equity pledge has become a popular financing method of the capital market due to its advantages of good liquidity and ease of operation,in particular,the impact of share pledge activity by major shareholders against listed companies is even more striking.Equity pledge has eased the problem of financing difficulties for listed companies to a certain extent.However,this kind of financing method is not without limitation.Once the stock price drops to the "flat line",the pledgee will face the risk of losing control of his company.This article will take the credit rating as the research direction,and conduct empirical research on the relationship between the equity pledge behavior of the controlling shareholder and the credit rating of the listed company,so as to further consider the economic consequences of the equity pledge.First of all,based on the related background introduction and literature review,this article analyzes the relevant characteristics of China's major shareholder equity pledges and listed companies' credit rating.Second,based on the existing literature researches,this paper proposes theoretical analysis and hypothesis.Afterwards,from the perspective of Chinese A-share listed companies,this paper uses the 2005(the year of split share reform)as the cut-off point,and selects the 2006-2017 data of controlling shareholders' equity pledges and the listed company's credit rating as the sample to conduct an empirical test,then a further robustness test was performed.Finally,this paper obtains the following conclusions:First,controlling shareholders'equity pledge activities will reduce the credit rating of listed companies;Second,good corporate governance can better restrict the opportunist behavior of large shareholders,thereby alleviating the negative impact of controlling shareholders'equity pledges to credit ratings.Thirdly,compared with state-controlled listed companies,the relationship between non-state-owned listed companies and controlling shareholders' equity pledges is more pronounced.That is,the behavior of controlling shareholders' equity pledges will have a greater negative effect on the credit ratings of non-state-owned listed companies.The research conclusions of this paper have enriched the academic researches on the economic consequences of equity pledge,expanded the empirical research on the factors affecting credit rating,and provided investors with a new perspective on the financing environment of listed companies,helped investors gain more comprehensive insights on the future solvency of the investee,so that they could prevent and reduce investment risks.In addition,the research in this article still has some deficiencies.For example,the sample we selected is the credit rating data made by various domestic rating agencies.The differences of the rating standards cause the consistency of the rating data not to be well controlled;the available sample size is small;the factors of the length of the equity pledge period of the controlling shareholder still need further consideration.