Study On The Economic Consequences And Countermeasures Of BQL Controlling Shareholders' Pledge

The listed company's stocks are easy to liquidate and highly liquid,which can greatly reduce the risk of borrowing by pledges such as commercial banks.Listed companies can expand new financing channels and ease financing difficulties through equity pledge.Therefore,in the A-share market in China in recent years,the equity pledge financing method is very popular among the controlling shareholders of listed companies,that is,investors with decision-making power.However,frequent and high proportion of equity pledge can make the controlling shareholder cash out in advance,which will also cause the separation of control rights and residual income rights,thereby significantly reducing the cost of controlling shareholders' encroachment on other investors' rights and causing serious agency problems.It is of great practical value to study how the controlling shareholder's equity pledge behavior affects the listed company's business decision-making.At present,the academic community often only analyzes the impact of equity pledge on certain aspects of listed companies based on large sample empirical analysis,and rarely combines some real-life cases to study the entire process of equity pledge and its economic consequences.This paper selects BQL company,which controls the frequent and high proportion of equity pledge of controlling shareholders,to study the research object,aiming to make other companies that are or are in the process of equity pledge more targeted to identify and prevent the risk of equity pledge,and regulate the controlling shareholder's equity pledge.Act to protect the interests of small and medium shareholders in listed companies.The research in this paper has important theoretical significance and practical application value.Based on the literature analysis of the causes of equity pledge,the private interest of control and the economic consequences of equity pledge,this paper interprets the relevant theories and finds that the equity pledge will result in the “separation of the two powers” of the controlling shareholder,weakening the incentive effect and strengthening the ripple effect.Then BQL enterprises are selected as research objects.Based on the principal-agent theory,the case analysis method is used to describe the whole process of equity pledge of BQL enterprise controlling shareholders and analyze the short-selling behavior of controlling shareholders to enterprises.In order to enhance the reliability of the case study,the research materials are collected from different ways to demonstrate and verify each other,thus verifying that the frequent and high proportion of equity pledge of the controlling shareholder has serious economic consequences for the listed company.Finally,the paper analyzes the impact of controlling shareholders' equity pledge on cash flow rights,short-term market reaction,financial ability of the company,ability of the company's sustainable operation and market value of the company,and has a negative impact on the equity pledge of the controlling shareholder.Suggestions were made from both internal governance and external supervision.The results of the research and analysis show that:(1)frequent and high proportion of equity pledge leads to limited sharing of interests between controlling shareholders and enterprises,thus weakening the incentive effect;pledge of equity makes the controlling shareholder disguised in advance and obtains huge wealth to reduce the opportunity cost of losing control of shareholders;controlling shareholders will have incentives and excuses to encroach on the rights of listed companies and other investors,resulting in a serious second-class agency problem.(2)The controlling shareholder uses the restructuring of the corporate governance structure,which overrides the internal control of the company and manipulates unreasonable foreign investment,manipulation of related party transactions,occupation of operating funds and non-operating funds,violation of external guarantees,and illegal use of funds.The mining method is short-selling listed companies.(3)The frequent and large-scale equity pledge behavior of the controlling shareholder will lead to the decline of the company's stock price and the deterioration of the company's solvency,profitability and development capability,which will cause the company to fall into financial difficulties;the long-term will lead to a significant decline in the company's market value,seriously affecting the company's ability to continue to operate,the company is in a state of bankruptcy.