Research On The Causes And Prevention Of The Equity Pledge Risk Of The Major Shareholders Of Listed Companies

The pledge of the shareholder's equity refers to the means by which the major shareholder of the company pledges the company's equity to a financial institution such as a brokerage firm and raises it at a certain pledge rate.Since the official launch of China's on-market stock pledge repurchase business in 2013,as an emerging financing method,the advantages of equity pledge have been paid more and more attention.Since equity pledge has multiple advantages such as low interest rate cost,simple operation,no dilution of equity,and no influence on control rights,the phenomenon of large shareholders using equity pledge financing is also increasing.The rational use of equity pledge can alleviate the difficulty of financing.According to statistics,as of the end of 2018,the total market value of stocks pledged by listed companies in China's A-share market reached 201 billion yuan,accounting for 4.60% of the total market capitalization of all stocks.Due to the fluctuation of the macro environment and the market environment,while the scale of the equity pledge business has been continuously improved,the hidden multiple risks have gradually emerged.In recent years,the instability of China's stock market has caused many companies' stock prices to fall below the closing line set by their shareholder pledges,seriously affecting the company's operating conditions and damaging the pledge party.Multiple parties should work together to prevent and resolve the risk of equity pledge,and further improve the capital market in China.Based on this realistic background,this paper combines the theoretical research method with the case analysis method,selects Spearhead Company as a case,and analyzes the equity pledge incident of the company to study the risks that the equity pledge may bring to the multi-party,and further analyze the reasons for the formation,and provide recommendations for the prevention of equity pledge risk of large shareholders of listed companies.Firstly,the article briefly summarizes the development status of China's equity pledge and the problem of risk explosion.Then it introduces the definition,characteristics and advantages of equity pledge.Then it sorts out the relevant research conclusions of domestic and foreign scholars,and lays a foundation for the later analysis.In the third chapter,the article analyzes the basic situation of Spearhead Company,and introduces in detail the status and problems of the equity pledge of major shareholders.On the basis of the previous article,the fourth chapter makes rational use of research tools such as event research method,financial index method and Z-value analysis method,and deeply explores the risks brought by equity pledge behavior to companies,major shareholders,pledgees and other shareholders.It was found that the equity pledge behavior of Spearhead's major shareholder had a significant negative impact on the company's performance.The major shareholder faced severe control transfer risk,and the interests of the pledger and minority shareholders may be highlighted by market risk and default risk.The fifth and sixth chapters of the article extend from the case to the entire A-share market.They analyze the causes of risk formation from the perspective of different subjects,and find corresponding solutions to the causes,and propose suggestions for effectively solving the risk of equity pledge.