Equity Pledge Of Controlling Shareholders And Corporate Social Responsibility:Legitimacy View Or Agency View

As an important financing channel,the equity pledge is deeply favored by major shareholders,especially controlling shareholders.In the LeTV network,the phenomenon of"high equity pledge of controlling shareholder and high level of corporate social responsibility”has caused public confusion.Is this a common phenomenon among listed companies in China?If this phenomenon prevails,why is this happening?This article is intended to answer these two questions.Therefore,this paper explores the impact of equity pledge of controlling shareholders on corporate social responsibility activities.On the one hand,the current research on corporate social responsibility ignores the importance of individuals,especially controlling shareholders,in shaping CSR.In view of the fact that equity concentration is widespread in listed companies in China,controlling shareholders have a crucial voice in the major decisions of enterprises,so it is necessary to study the relationship between controlling shareholders and CSR;On the other hand,the literature about the impact of large shareholders'equity pledge on the company's business decision-making in the previous research mainly focused on the dividend policy and innovation activities,and the typical“adjustable expenditure”in enterprises that also involves considerable financial resources-corporate social responsibility,is lack of relevant research.This paper mainly analyzes the relationship between the controlling shareholder's equity pledge and the corporate social responsibility based on the legitimacy theory and the agency theory,as well as the existing research results.The Chinese listed companies that issued the corporate social responsibility report from 2008 to 2016 were selected as the research objects,and empirical analysis was carried out to draw the following conclusions:(1)The more the controlling shareholder pledges,the less corporate social responsibility the company performs;(2)The concentration of ownership will enhance the negative correlation between the controlling shareholder's equity pledge and corporate social responsibility;(3)The higher the proportion of independent directors on the board of directors,the weaker the relationship between the controlling shareholder's equity pledge and corporate social responsibility;(4)Conclusions(1),(2).(3)all support the agency theory,indicating that the social rules(legitimacy theory)can not effectively limit the use of CSR activities(agency theory)by controlling shareholders to seek private benefits;(5)The use of equity checks as a criterion for controlling shareholders is stable and effective;(6)The degree of market competition will enhance the negative correlation between the controlling shareholder's equity pledge and corporate social responsibility;(7)In the short term,the implementation of low-level corporate social responsibility caused by the controlling shareholder's equity pledge has no negative impact on corporate value.The conclusions of this paper are still valid after conducting robust tests and controlling endogenous problems.