Equity Pledge,Audit Quality And Crash Risk In Stock Market

In recent years,equity pledge has gradually become a flexible financing method in the capital market.The controlling shareholder's equity pledge behavior of listed companies has become increasingly prosperous.At the same time,China's securities market has seen requent fluctuations.It is not known whether there is a direct connection between equity pledge and frequent fluctuations in the securities market,but many studies have shown that the risk of stock market crashes largely comes from the concealment of negative news by listed companies and the resulting risk accumulation.Under a high proportion of equity pledge,Company managers are also more inclined to conceal negative news.Once the unfavorable news is concentrated,whether it will cause sharp fluctuations in the stock price of listed companies is also a topic worth exploring.External audit,as a common external monitoring factor,plays an important role in reducing the asymmetry of information between shareholders and management and protecting the interests of small and medium shareholders.The level of audit quality will largely affect the manipulative earnings management behaviors of listed companies,and some studies suggest that external audit will have an impact on curbing stock price fluctuations.With the support of the theory of principal and agent,according to the actual situation of China's equity pledge and related policies,this article selects A-share listed companies in China's securities market from 2013 to 2018 as the research object to explore the impact of controlling shareholder equity pledge on the risk of stock price collapse.At the same time,the introduction of audit quality as an external monitoring factor of corporate governance studies the impact of this external variable on the relationship between equity pledges and stock price crashes.The research finds that controlling shareholder equity pledge will increase the risk of stock price crash.When accrual earnings management level is selected as a proxy for audit quality,there will be a significant negative relationship between external audit quality and the risk of stock price crash,that is,The higher the quality of the audit,the greater the transparency of the information,and the risk of a stock market crash will be reduced accordingly.After further research,we also found that the level of audit quality will affect the risk of stock price collapse caused by the equity pledge of shareholders of listedcompanies.The higher the quality of audit,the more it can weaken the positive impact of equity pledge on the risk of stock price collapse,that is,when there is When effective high-quality external auditing,to some extent,it is possible to find possible earnings management behaviors of listed companies' equity pledges,thereby effectively preventing the risk of stock price crashes caused by the accumulation of bad news.Therefore,it is possible to improve the quality of external audits,strengthen the management of the equity pledge process,strictly audit the pledge of listed companies,control the proportion of equity pledges,and monitor the flow of funds and management behavior after equity pledges,thereby alleviating equity pledge issues and stabilizing investment.These emotions promote the healthy development of China's securities market.