An Empirical Study On The Impact Of Controlling Shareholder Pledge On Business Performance

With the phenomenon of "all-share pledge" in China's a-share market,the pledge behavior of controlling shareholders has A great impact on the capital market,listed companies and investors.The pledge of equity expands the financing channels,but it also causes the deviation of controlling shareholder's control right and cash flow right,which may become the means of tunneling the listed company by major shareholders.First,the controlling shareholder does not lose the substantial control right of the enterprise after the pledge,and further aggravates the degree of separation of the two rights,which provides convenience for the controlling shareholder to encroach on resources.Secondly,controlling shareholders still prefer equity pledge financing to raise funds when they are faced with the risk of transfer of control rights,indicating that controlling shareholders have a strong demand for funds.Finally,the controlling shareholder can intervene in the production and operation,indicating that the controlling shareholder is capable of tunneling.At present,the research on the pledge of equity is not sufficient,and most of the research is mainly normative.Based on the normative research and empirical research methods,this paper takes the mechanism of the action of the pledge of controlling shareholder's equity on the company's business performance as the core,focuses on the problem of the investment of the pledge of equity capital,and analyzes the difference in the impact of different investment of capital on the pledge behavior.Studying the behavior of controlling shareholder's pledge of equity not only helps to restrain the behavior of major shareholders and improve the corporate governance mechanism of listed companies,but also provides reference significance for standardizing the system of pledge of equity,improving the governance capacity of regulatory agencies and purifying the noise of capital market.Through combing relevant literature and combining the development status of equity pledge,this paper analyzes the motivation of controlling shareholders to make equity pledge,and further analyzes from the theoretical perspective the difference in the impact of equity pledge behavior of controlling shareholders with different motivations on business performance.Finally,empirical test was conducted,and the main conclusions were as follows:(1)with the increase of the proportion of pledge of controlling shareholders' equity,the operating performance of listed companies declined significantly.(2)When the controlling shareholder's equity pledge capital is invested in itself or a third party,the operating performance of the listed company decreases significantly.(3)After dividing the controlling shareholders into state-owned shareholders and non-state-owned shareholders according to the nature of property rights,it is found that different controlling shareholders have different willingness and intensity of intervention on the operating performance of the superior company.The main realization of state-owned shareholders will not have a significant impact on the performance of listed companies.Finally,the conclusion of empirical study is analyzed and some constructive Suggestions are proposed.The innovation of this paper mainly comes from the novel research perspective,which includes the investment of pledge funds into the research structure.Compared with only considering the impact of pledge ratio on enterprise performance,the research is more comprehensive.It also enhances the applicability of the conclusion.The deficiency of this study is that the research on the company's long-term and short-term performance and equity pledge ratio has not been clearly defined,which is also the direction worth studying in the future.