Study On The Motivation And Economic Consequences Of Major Shareholder's Equity Pledge Of Oceanwide Holdings

In recent years,pledge of equity,as a relatively flexible financing method,has been widely welcomed by major shareholders and become an important choice for major shareholders normally in China.However,while listed companies get a lot of benefits through equity pledge,there will also be many problems.The frequent and large pledge of shares by major shareholders aggravates the degree of separation between the two rights of major shareholders,which leads to the possibility of major shareholders' encroachment on the interests of listed companies and brings a variety of economic consequences to the company.Therefore,this paper hopes to provide certain references and warnings for listed companies and regulators,so as to promote the healthy development of China's listed companies and capital market.This paper firstly expounds the background and significance on the study of the major shareholders' equity pledge and analyzes the specific situation of the major shareholder's equity pledge of Oceanwide Holdings,on the basis of principal agent theory,information asymmetry theory and private control theory.Then,this paper starts with the motivation of the major shareholder's equity pledge,by using La Porta method,cumulative excess yields method,Z.score model,Tobin's Q method combined with case study method,comprehensively analyzing the economic consequences of a high proportion of equity pledge of the major shareholder.The result of the research shows that the pledge of the major shareholder will aggravate the separation of the two rights of the listed company,and the major shareholder will seize the opportunity to encroach on the interests of the listed company through the related party transaction,huge guarantee and other ways,which will affect the stability of the company's stock price,increase the financial risk of the company,and do harm to the interests of minority shareholders and investors.And finally,This paper gives some suggestions on the economic consequences of the pledge of Oceanwide Holdings' share pledges in aspects of adjusting the equity structure,strengthening the management of major shareholder's equity pledge and the external supervision,formulating scientific business strategies and so on.