Share Pledge And The Protection Of Minority Investors

With the development of enterprises,the demand for capital is increasing.When the internal financing cannot meet the demand,external financing becomes an important way for enterprises to obtain capital.At present,China has gradually diversified its financing methods.As one of the financing methods,equity pledge has become A financing method commonly used by major shareholders of enterprises in the a-share market in China due to its advantages of convenience and low financing cost.Although the wide application of equity pledge complies with the requirements of market development,it also brings many influences.Under the craze of pledge,the risk of liquidation often occurs in China's a-share market,especially in the case of the bear market in 2015,when the stock price fluctuates greatly,equity pledge has become A sword hanging over the head of many enterprises,and attention on equity pledge has also increased accordingly.Therefore,the study on equity pledge is also very important.Although equity pledge is the personal behavior of controlling shareholders,the risks and consequences brought by it not only cause adverse effects to enterprises and financial institutions,but also bring serious damage to the interests of the majority of small and medium-sized shareholders.Especially in the case of weak protection of the interests of small and medium-sized investors in China,equity pledge has become a weapon to harm small and medium-sized shareholders.Combined with the equity pledge case of letv,this paper analyzes the motivation of Letv equity pledge,how Letv affects the interests of small and medium investors through equity pledge,and explores and analyzes the reasons for the negative impact through these performances,and gives Suggestions and opinions on the reasons.Through this article,the study found high proportion of equity pledge not only in the value of equity and stock liquidity hurt their interests,at the same time because of the agency problem between shareholders equity pledge can produce size and strengthen the occupation effect,Letv's controlling shareholder,the use of related party transactions for money occupation,for illegal guarantee,using related-party whitewash statements,small and medium-sized investors misleading on the disclosure of information.In the end,equity pledge did not ease the financial strain of the enterprise.On the contrary,after equity pledge and the encroachment effect,the company's performance gradually declined and had to face the risk of delisting.It is because of the lack of internal governance and the weakness of external supervision that the pledge of equity will cause a variety of negative effects on small and medium-sized investors.In terms of internal governance,a single share of equity structure and the imperfection of internal control provide a channel for controlling shareholders to seize the interests by means of equity pledge.In addition,the imperfect laws and regulations in terms of external supervision and the weak supervision of external audit will definitely damage the interests of small and medium-sized investors.Through the analysis of the reasons for their interests being infringed,this paper puts forward corresponding opinions and Suggestions from the perspectives of laws and regulations,information disclosure,corporate governance and investors themselves,so as to better protect the interests of small and medium-sized investors.