Equity Pledge,Managerial Entrenchment And Stock Price Crash Risk

Capital is critical to the company's operations.In recent years,in order to broaden financing channels for listed companies,the pledge equity by major shareholders has become increasingly common.Equity pledge,as a fashionable financing method,is being adopted by more and more companies.The reason why equity pledges are popular with shareholders is because they have advantages not available in other financing methods.First,compared with other financing methods,equity pledges using equity as collateral in exchange for funds do not affect the status of controlling shareholders in listed companies and Role,the controlling shareholder can continue to participate in the daily operations and management of the company.Second,the current bank loan barriers are obvious and the cost of loans is high.In contrast,equity pledges are more efficient,financing cycles are short,and equity pledges are less restricted.However,while pledge of equity solves the problem of capital of major shareholders,there are certain risks.Equity pledge is a very typical act of increasing leverage.With the decline of the stock market and the advancement of financial deleveraging policies,the tightening of liquidity and the tightening of regulations have also brought tests to both financing and investors.The risks have to make People concern.Existing studies have found value and decision-making.When the stock price related to the value of the enterprise is linked,we can speculate that when the stock price drops below the liquidation line,the equity pledged by the shareholders will be forced to liquidate,which will bring the risk of control transfer.Therefore,based on the status quo of equity pledge of listed companies in China,this article studies how equity pledge affects the risk of stock price crashes and what role management defense plays on both.Managers play an important role in the operation of listed companies.The management defense theory holds that both from the theoretical and practical aspects of modern business management,it is proved that managers do not always aim to maximize corporate value,especially when managers are faced with dismissal,corporate bankruptcy,replacement,status,and on-the-job consumption.When enjoying and enjoying the impact,there will be a motivation to pursue the maximization of their own interests,and they will take measures to keep existing positions,defend against possible dismissal and replacement behaviors,and consider the interference and concealment of the company's bad news.Then the risk of the company's stock price crashing is formed.This paper first reviews relevant information and literature on equity pledge,management defense,and stock market crash risk.Then based on bad news hiding theory,and rational economic man,and other related theories,the relationship between equity pledge and the risk of stock market crash is analyzed theoretically,and the relationship between equity pledge and the risk of management is discussed from the perspective of management defense.The role of the stock market crash relationship.Then,based on the references read,put forward corresponding assumptions,and then use the data of listed companies from 2013 to 2018 as empirical samples to study the relationship between the equity pledge of major shareholders and the risk of stock market crashes,and further explore and empirical management defense The role in equity pledge and stock price collapse leads to the conclusion of this article.Finally,corresponding suggestions are put forward based on the conclusions obtained.This thesis mainly studies the relationship between equity pledges and stock market crashes of listed companies,and explores its role in the relationship between equity pledges and stock market crashes from the supervision of management defense.The main research results show that:(1)there is a significant positive correlation risk of stock price crash.The higher the equity pledge ratio,the greater the risk of stock price crash;(2)the existence of a relationship between management defense and the risk of stock price crash Significant positive correlation;(3)Management defense equity pledge and the risk of stock price crash.The relationship between equity pledge and the risk of stock price crash of companies with a high level of management defense is more significant.In view of the above research results,this article gives the following suggestions:(1)In order to avoid excessive speculation by shareholders,the equity pledge information disclosure mechanism and supervision mechanism should be strengthened,and a prudent attitude should be adopted when conducting equity pledges to prepare a risk preparation plan in advance;2)Actively establish and improve the management defense evaluation system of listed companies,form a reasonable shareholding structure,strengthen external supervision,and make management goals consistent with company goals.The research in this paper expands the research on the factors related to equity pledge and the risk of stock price crash,and also enriches the relevant literature on management's defense level.It has made some improvements and supplements to the financing of equity pledge of listed companies,and it also has certain reference significance for studying the risk of stock market crash.