Research On The Impact Of Controlling Shareholder Equity Pledge On Corporate Value

As an innovative financing behavior,equity pledge breaks the traditional financing method,which not only broadens the financing channels of the company,but also increases the financing ways of shareholders.The so-called equity pledge is that shareholders take the shares they hold as pledges,obtain loans from financial institutions such as brokers,banks,trusts,etc.,while retaining their control over the company.Moreover,the equity pledge has the advantages of high efficiency and large amount,so it is very popular in the capital market,and the number of cases in which the company's shareholders use the equity pledge for financing is increasing.However,as the scale of equity pledge continues to expand,related systems are difficult to keep up,so the risk events related to equity pledge continue to emerge.In recent years,many companies' controlling shareholders have pledged their shares in large quantities,but because of the market is weak,the stock prices of these companies are falling,leading to the closing of the stocks pledged by the controlling shareholders,which leads to a series of risk events such as the company's stock price collapse,which has an important impact on the company's operation and market image,resulting in a decrease in the company's value.Therefore,it is very urgent to study the equity pledge behavior,especially the controlling shareholder pledge behavior.Among the existing research results,the research on equity pledge behavior is mainly divided into empirical analysis and case study,and mainly focuses on the economic consequences brought by equity pledge financing,such as the impact on company performance,stock price,and enterprise innovation.Among them,some researchers study the impact of equity pledge on the value of the company,mainly focusing on the separation of the two rights brought by the equity pledge,the tunneling behavior of the controlling shareholder and the interest encroachment.Few studies have comprehensively considered the equity pledge.Based on this,this paper will comprehensively consider the impact of controlling shareholder equity pledge on the company's value from three research perspectives,making the research results more comprehensive.The main conclusions of this paper are as follows:(1)When the equity pledge is not considered,the cash flow rights and voting rights of the company owned by the controlling shareholder are positively correlated with the company's value,that is,there is an incentive effect,but the existence of the separation of the two powers will make the second type of agency problem arises and causes the company's interests to be infringed,which in turn reduces the company's value;(2)After considering the equity pledge behavior,we find that the controlling shareholder's equity pledge may lead to weakening the incentive effect and strengthening the encroachment effect,thus having a negative impact on the company's value;(3)Based on the accounting point of view,we find that the controlling shareholder's equity pledge is negatively correlated with the company's performance,but the concentration of ownership has a positive impact on company's performance;(4)When considering equity-balancing,equity-balancing will weaken the negative effect of the controlling shareholder's equity pledge on the company's value,thereby reducing the negative impact of the equity pledge.