A Case Study On The Risk Of Equity Pledge Financing By Controlling Shareholders In Company A

Equity pledge is favored by many major shareholders of listed companies because of its low financing threshold and convenient and flexible financing characteristics,and it is a common financing method for the major shareholders of listed companies.However,while meeting the financing needs,equity pledge also makes risk to major shareholders themselves,listed companies,small and medium-sized shareholders,pledgee financial institutions and other relevant subjects,which should not be neglected.Especially when major shareholders aim to gain personal benefits via equity pledge,which makes more serious risks to listed companies.With poor performance of economic environment,all the relevant subjects face severer situation and need to take concrete measures in time to prevent equity pledge financing risks.The research methods used in this paper mainly include four methods: case analysis method,literature research method,comparative analysis method and event study method.This paper takes case analysis as the coral method,on the one hand,through the research of relevant literature at home and abroad,this paper analyzes the motivation and risk of the large shareholder pledge of company A,on the other hand,the comparative analysis method is applied throughout the paper.In the data analysis of equity pledge financing risk,event analysis method is used for representative equity pledge financing events to study the short-term response of this particular equity pledge event to the capital market.Based on the literature and theory of equity pledge,this paper firstly sorts out and analyzes the current situation of the equity pledge financing market in China,and then,with Company A as the research object,this paper analyzes the equity pledge financing risk of Company A.From the perspectives of various relevant subjects,such as the pledge shareholder,the enterprise,the small and medium-sized shareholders and the pledgee financial institution,this paper raises defense measures for different relevant subjects separately to deal with the risk of equity pledge.Through the research on the financing risk of the equity pledge in Company A and the analysis of the risk prevention measures of the relevant subjects,this paper draws the following conclusions: The major shareholders are facing the risks of losing control and forced liquidation,and the major shareholders' precautions against these two kinds of risks are directly releasing pledge and supplementary pledge.The risks faced by Company A under the pledge of equity include the market risk caused by the volatility of stock prices,the risk of stock liquidity weakening and the credit risk of the large shareholder's high proportion of pledge,and the risk prevention measures include use of suspension,rotation pledge and improvement of the corporate governance both internal and external governance environment.Small and medium-sized investors mainly rely on improving the transparency of information disclosure to maintain their interests.Pledgee securities and other financial institutions set the guarantee ratio bottom line to deal with the risk of bad debt losses caused by equity pledge business.The regulatory authorities take the lead in organizing special funds to help enterprises cope with the risk of equity pledge,so as to prevent the spread of equity pledge risk in the market.It is hoped that through the research from this paper,this paper can provide reference ideas for the major shareholders from other listed companies planning to use equity pledge about which specific risks should be considered,and also provide concrete and practicable suggestions for various relevant subjects in other listed companies about how to deal with the equity pledge risks.