Research On The Influence Of Controlling Shareholders' Equity Pledge On Crash Risk

The development of China's capital market is still immature,and the stock price has soared and plunged frequently.Not only is the market's market plunging,but the phenomenon of stock market plunging caused by the release of negative news is also very common.The stock price crash has seriously jeopardized the interests of investors and disrupted the order of capital market operations.Therefore,it is necessary to study the influencing factors of the stock price crash risk.Since in 2013 the Shanghai Stock Exchange launched the stock pledged repo transaction business,China's equity pledge has developed rapidly and the pledge scale has exploded.At present,equity pledge is favored by shareholders.However,the risk cannot be ignored.A large decrease in the price of the pledged stock will trigger the risk of liquidation,and the controlling shareholder may lose his control right.Therefore,in order to avoid the risk of losing control,will the controlling shareholder take measures to stabilize the stock price after the equity pledge,and reduce the risk of the company's stock price plunging?To this end,this paper takes the 2007-2017 A-share listed companies as a sample,and examines the impact of controlling shareholders' equity pledge on the stock price crash risk from a micro level.After the empirical test,this paper finds that compared with the listed company with no equity pledge of controlling shareholder,the listed company with equity pledge of controlling shareholder has a lower crash risk,indicating that the controlling shareholder pledge is beneficial to reduce the crash risk to a certain extent.It is because the controlling shareholder has a strong incentive to take measures to stabilize the stock price and reduce the crash risk,in order to reduce the pressure of additional guarantees and to avoid the risk of transferring control.In further analysis,the paper also found that this relationship is more prominent in non-state-owned holdings and listed companies with low equity balance.The result still holds after accounting for possible endogeneity issues through using PSM and a two-stage least squares estimation.Finally,based on the actual situation of China's capital market,to promote the positive impact of the controlling shareholder's equity pledge and the favorable impact on the capital market,this paper provides the regulatory authorities,listed companies and the banking brokers with specific recommendations.