Research On Large Shareholders' Equity Pledge And The Protection For Investers' Interest Among The Residual Rights Of Control

As China 's macroeconomic downward pressure continues to increase,problems such as lack of vitality and insufficient liquidity in the capital market occur frequently,and issues such as expensive financing and difficult financing faced by enterprises in the financing process have also become the primary factors limiting their development.Equity pledges have become the preferred method for major shareholders of listed companies in order to alleviate financing pressure due to their advantages such as fewer approval procedures,fast financing,and no transfer of control of pledged large shareholders.According to Oriental Fortune Network Choice data,as of September 6,2019,there were 3,205 listed companies' major shareholders with equity pledges,with a total market value of RMB 34.75 trillion,showing the scale of equity pledges.Although equity pledge is a personal behavior of major shareholders,its role as a controlling shareholder of a listed company brings more meaning to equity pledge.Since Bailey and Mearns proposed the separation of powers,the principal-agent problem of listed companies has gradually transitioned from the first type of agency problems led by major shareholders and management to the second type of agency led by major shareholders and small and medium shareholders.On the issue.Subsequently,Grossman and others proposed the incomplete contract theory based on the Berle-Means paradigm,and introduced relatedcorporate governance issues such as the private benefit of control caused by the separation of the two rights into deeper research.The protection of investors' interests is accompanied by the emergence and development of the capital market,and plays an important and positive role in the healthy operation of the capital market.Therefore,studying the mechanism between the equity pledge of large shareholders and the protection of small and medium investors has certain theoretical and practical significance for improving China's equity pledge system and investor interest protection mechanism.In order to explore the mechanism between equity pledge and the protection of the interests of small and medium-sized investors,this paper takes Shanghai and Shenzhen A-share listed companies from 2010 to2018 as the research sample,using theoretical analysis,ordinary least square regression and Propensity Score Matching method(PSM),based on the behavior of major shareholders' equity pledge of listed companies,combined with residual control theory and contract theory and other relevant corporate governance theories This paper studies the mechanism between the pledge of shareholders' equity and the protection of the interests of small and medium-sized investors.Further explore the cross multiplication of major shareholders' equity pledge and corporate governance factors,and examine whether under the influence of internal and external governance factors,the interests of investors can beprotected from infringement when major shareholders have equity pledge behavior.Finally,the following three research conclusions are drawn:first,the behavior of equity pledge will cause major shareholders to use their residual control rights to seize the interests of listed companies,which is more significant in private enterprises;second,internal and external governance can effectively alleviate the hollowing out of listed companies by major shareholders using equity pledge.Among them,in the external governance of the company,the listed companies audited by the four major accounting affairs can significantly inhibit the hollowing out of the listed companies by major shareholders,which is more significant in private enterprises.And the higher the level of rule of law,the lower the tunneling level of major shareholders.In the internal governance of the company,the separation of the two rights can inhibit the hollowing out of the listed company by the pledge of the major shareholders' equity,and the private enterprises perform more significantly than the state-owned enterprises;thirdly,the tunneling behavior caused by the pledge of major shareholders' equity of listed companies will ultimately damage the interests of small and medium-sized investors,and it is more obvious in the grouping of non-state-owned enterprises.