Study On The Equity Pledge Of Controlling Shareholders And The Private Benefits Of Control

As an emerging financing method,equity pledge has developed rapidly in China's capital market.According to Wind's statistics,there are 3,434 listed companies in China's A-share market with pledge of equity,and the total number of pledge shares is 634.152 billion.The total market value of equity pledge is about 6 trillion RMB,accounting for about 10% of the total market value of A-share market.In particular,the controlling shareholder's equity pledge behavior of private enterprises is more frequent.A great number of studies by scholars have shown that the controlling shareholder equity pledge will directly cause the further separation of the control rights and the cash-flow rights.With the continuous dilution of the cash-flow rights,the motive that controlling shareholders to plunder the interests of other minority shareholders through absolute control advantage will become stronger.The controlling shareholder uses the powerful tool of equity pledge to transfer the risk to the pledgee,and then encroach on the company's assets and other shareholders' wealth through a series of related transactions,such as related party transactions,and related guarantees,which cause the company's value goes down and the interests of minority shareholders are damaged.This paper mainly uses literature research method,case study method,qualitative and quantitative analysis methods,from the principal-agent theory,private-control theory and information asymmetry theory,combined with the concept to construct theoretical framework.Taking Jin Yi Culture Company as the case study object,first introduce the basic situation of the research object and analyze the process of the equity pledge of the controlling shareholder,starting from the degree of separation of the two rights,study on motive of equity pledge and the negative impact of the company's operating performance,financial status,abnormal business situation and transfer of the control rights.Finally,present related suggestion to prevent the controlling shareholder from using the form of equity pledge to seek personal interests and protect the interests of minority shareholders.