Research On The Influence Of Major Shareholder's Equity Pledge On Stock Repurchase And Its Market Response

In China's a-share market,pledge by major shareholders is very common.When the stock price fall,all sectors of society will pay close attention to the risk of stock price plunge caused by share pledge.If the stock price falls to the warning line,but the shareholders do not have enough shares to call the margin,there will be a risk of losing the control of the company.In extreme cases,if this phenomenon occurs in large quantities,it will cause collective panic in the market,bringing huge systemic risk.In order to avoid the risk of equity pledge,China's regulatory authorities also put forward the corresponding measures.In the newly revised company law,the provision that "listed companies can conduct stock buybacks when necessary to avoid major damage to the company and maintain the company's value and shareholders' rights and interests" is added,and the contents such as holding stock shares and increasing the proportion of buybacks are allowed.All people think that this is good news for resolving the risk of stock pledge.Generally speaking,stock repurchase signals to investors that the stock is undervalued,so investors will generally give positive comments on the company's stock repurchase behavior.After the announcement,the stock price of the company in the secondary market will rise.However,if the controlling shareholder manipulates the listed company to conduct stock repurchase in order to improve the stock price when facing serious equity pledge risk,if the investor can identify the real motivation of such stock repurchase,it is likely not to give a positive market reaction.This paper combines normative analysis and empirical analysis to study the impact of pledge of major shareholders' equity on the company's share repurchase and its market response in China's a-share market.This paper first adopts the method of normative analysis to theoretically analyze the influence of pledge of major shareholders on stock repurchase and its market response.Then the empirical study is conducted on the basis of the event research method,which preliminarily finds that the stock repurchase market response is different under different equity pledge conditions.After that,Logit regression and multiple linear regression analysis were carried out respectively,and the following two conclusions were drawn: 1.Companies with a high proportion of equity pledged by major shareholders are more likely to conduct stock buybacks,and this effect is more obvious when major shareholders have a higher level of control;2.The market reaction of share repurchase of listed companies decreases with the increase of the proportion of pledge of major shareholders' equity,and this effect is more obvious when major shareholders are faced with the pressure of covering positions and the company is a non-state-owned listed company.Finally,according to the research results of this paper,the corresponding policy Suggestions are put forward from the three aspects of "information disclosure,system construction,risk prevention and control".