The Impact Of The Pledge Of Stock Rights Of The Major Shareholders Of Listed Companies On The Value Of The Company

Since 2013,pledge of stock rights has gradually entered the public's field of vision.This kind of financing method is that the major shareholder regards the shares held by them as pledge,and then obtains a loan from financial institutions such as brokers,which is favored by many major shareholders of listed companies.The scale and number of transactions also showed an explosive growth trend,and even appears the phenomenon of “full-stock pledge” until 2018,This emerging financing method has turned the shareholding of major shareholders from static to dynamic,making its financing more convenient and simple.Although it has widened the financing channels,it has also increased its risk.Since the control of the major shareholder will not decrease after the pledge of stock rights,the shareholder's rights of cash flow will decrease,which will aggravate the separation of the two powers of the company,resulting in the cost of the large shareholder's encroachment on the company's interests and the short-selling behavior.The possibility is greater,and it is more likely to draw on the interests of the company and minority shareholders.In addition,if the stock market goes down and the price of the pledged stock falls below the closing line,the probability of default will increase greatly,resulting in damage to the interests of the pledgee and investors,and will affect the company's value.Therefore,it is important to study the impact of pledge of stock rights on the value of company.Based on the information asymmetry,principal-agent theory and company value theory,this paper compares the value of the company before and after the pledge of stock rights of the major shareholders,and finds that the pledge has intensified the separation of the two rights and will have a negative impact on the company's value.Although the shareholder's pledge is ostensibly their personal behavior,they have a direct or indirect impact on the company's management,resource allocation,investment decisions and financial decisions,and these will affect the company's value.By reviewing relevant theories,scholars' research on pledge of stock rights mostly focuses on the research of agency problems,and there are few literatures on empirical analysis of the relationship between the pledge and the value.Therefore,this paper first analyzes relevant theories and analyzes the related literatures on the impact of separation of two rights on the value of the company,the motive of the shareholders' pledge of stock rights,and the impact of the shareholders' pledge on the value of companies.Secondly,based on 2014-2018,through qualitative and quantitative analysis of the institutional development and status quo of the pledge;thirdly,through the data of 2014-2017,constructing model and descriptive statistics and empirical analysis,it is proposed to reduce the pledge to the company value.Finally,proposal to reduce the risk of the pledge to the value.The expected goal of this paper is to verify whether the proposed hypothesis is established under the condition that other factors are unchanged:(1)The pledge reduces the major shareholders' cash flow rights,which reduces the incentive to increase the company's value,thereby weakening the incentive effect.Negative impact on the value of the company;(2)The pledge of stock rights will weaken the positive correlation between the control and the company's value,thereby reducing the company's value;(3)The pledge will increase the cash flow rights and control of the major shareholders.Separation,which in turn strengthens the encroachment effect and reduces the company's value.By examining the above assumptions,it is concluded that in the A-share market,the behavior of the pledge of the major shareholder's will have a negative impact on the company's value.This will not only improve the deficiencies of the existing literature,but also propose corresponding proposals to protect the interests of investors.