The Relationship Between Share Pledge,Share Repurchase And Stock Price Crash Risk

Share pledge is a conventional financing method.Since the on-site pledged repurchase business was launched in 2013,the share pledge by major shareholders of listed companies in China has shown a general trend,and some listed companies have experienced an abnormally high pledge rate of controlling shareholders.What's more,some listed companies' multiple major shareholders pledged their share at the same time.The major shareholders of some listed companies have pledged a large number of shares to obtain the established income before the negative news of listed companies broke out.However,the negative impact of the stock price crash after the negative news broke out is borne by investors.The share pledge of major shareholders even caused a general panic as the market continued to decline.The risk of major shareholders' equity pledge has gradually attracted widespread attention.So,does the share pledge of major shareholders increase the risk of stock price crashes? At the time of the share pledge crisis caused by the continuous decline of china stock market in 2018,the National People's Congress revised the relevant provisions of the company law on share repurchase,broadened the situation of repurchase and simplified the repurchase procedure.The deregulation of the system has opened the upsurge of stock repurchase of listed companies.However,is share repurchase an effective way to reduce the risk of stock price crash caused by the pledge of major shareholders? The tendency and effect of share repurchase of listed companies under the pledge of major shareholders' equity deserve further discussion.Based on the theory of Information asymmetry theory and behavioral finance theory,this paper puts share pledge of major shareholders,stock price crash risk and stock repurchase into the same research framework.This paper selects listed companies in 2014-2019 as the research object.sing the method of literature research and empirical analysis,this paper mainly discusses three questions:(1)Will the increase of the degree of pledge of major shareholders increase the risk of stock price crash?(2)Will the pledge of major shareholders' equity prompt the company to buy back shares?(3)Can stock repurchase play a role of signal transmission and reverse intermediary role in the relationship between the pledge of major shareholders' equity and the risk of stock price crash?The main conclusions of this paper are as follows.First,share pledge of major shareholders will increse stock price crash risk.Second,after the major shareholders pledge their shares,they will urge the company to repurchase shares in order to relieve the pressure of margin call and even reduce the risk of control transfer of controlling shareholders.Third,share repurchase can play a role of signal transmission,and effectively alleviate the positive relationship between the share pledge of major shareholders and the stock price crash risk.Finally,the above conclusions mainly exist in the case of private listed companies and controlling shareholders have pledged their share.In state-owned listed companies and controlling shareholders not pledging their shares,the positive relationship between the degree of pledge of major shareholders' shares and the risk of stock price collapse is not significant.After replacing key variables,expanding sample selection interval,using PSM method and IV method to test robustness,the basic conclusion of this paper is still valid.