Controlling Shareholder's Equity Pledge,Internal Control Quality And Debt Financing Cost

With the continuous reform of the financial system and the steady growth of the Chinese economy,the equity pledge business is one of the effective ways to quickly solve the financing problems of enterprises.In China's capital market,and has gradually become a hot topic for scholars at home and abroad.According to the mature development experience of foreign countries,equity pledge has become a “quick channel” for large shareholders to cash out and get rid of.At the same time,some scholars have pointed out that equity pledge will lead to further separation of control rights and cash flow rights,thereby increasing the interests of major shareholders against listed companies and minority shareholders.Motivation,domestic research has also pointed out that equity pledges make the controlling shareholders short-selling listed companies more serious,which will reduce the company's value and negatively affect the company's operating performance and other adverse economic consequences.The current research can affirm that the company's high value and good performance will increase investor confidence,reduce the cost of debt financing,and broaden financing channels.Will the occurrence of equity pledge affect the cost of debt financing? However,the current lack of empirical evidence of equity pledge directly on the cost of debt financing can not be said to be a shortcoming.As an important internal governance structure of the company,internal control can control the important mechanism of the company's internal risks.Will it have a certain adjustment effect on the relationship between equity pledge and debt financing costs? How does the increase in internal control operational efficiency affect the cost of debt financing? Therefore,this paper focuses on the internal control mechanism of the enterprise,specifically explores the relationship between equity pledge behavior and the cost of debt financing.Will the improvement of internal control quality weaken the negative effect of equity pledge behavior on the cost of debt financing?This paper takes 2009-2016 China's Shenzhen-Shanghai Main Board listed company as the research object,and attempts to study the controlling shareholding pledge from the perspective of “holding equity pledge?increasing corporate debt financing cost?improving internal control quality level?enterprise financing cost reduction” The impact on the cost of corporate debt financing,and the quality of internal control is added on the basis of the interaction between the two,and how the relationship between the two changes under different property rights.A wealth of data suggests that if a controlling shareholder's equity pledge occurs,corporate debt financing costs are generally high,which is more obvious in non-state-owned enterprises.Further research found that high-quality internal control can weaken the negative impact of controlling shareholder's equity pledge on corporate debt financing costs,and this inhibition is more obvious in private enterprises than in state-owned enterprises.The research shows that the development of China's equity pledge system is not yet mature,and the equity pledge shows obvious “interest transfer”.The regulatory authorities should further improve the equity pledge system,strengthen the construction of the internal control system of listed companies,and truly realize the equity pledge to solve the financing constraints of enterprises.Broaden financing channels and create value-added goals.