Research On The Economic Consequences Of Equity Pledge Of Chinese A-Share Listed Pharmaceutical Manufacturing Enterprises

As a novel financing method,on the one hand,equity pledge has maintained a high level of popularity in China's A-share market for a long time.At present,nearly 80% of listed companies in China have pledged their equity,among which the market value of the pledge of the pharmaceutical manufacturing industry is the highest.The traditional point of view is that equity pledge has sent a negative signal to the market about these companies.To some extent,equity pledge not only reflects the strong capital requirements of the company,but also hides the risks of the controlling shareholders occupying the interests and resources of the company itself and related stakeholders,which may bring terrible economic consequences to the company.On the other hand,the pharmaceutical manufacturing industry is an important part of the national economy in China.Also,as one of the major industries for development of the “Thirteenth Five-Year Plan” and the target market of STAR Market,the development of the pharmaceutical manufacturing industry has far-reaching significance for China's economic development.With the deepening of the aging of our population,people's demand for medical care is bound to keep expanding in our country.And the pharmaceutical manufacturing is getting more and more attention from people across a broad spectrum.Therefore,it is of great significance to research on the economic consequences coursing by equity pledge of the pharmaceutical manufacturing companies for the corporate governance and industry development.This paper takes the equity pledge panel data of 191 listed pharmaceutical manufacturing companies in China from 2014 to 2018 as the research object.The economic consequences evaluation system for pharmaceutical manufacturing companies is divided into three perspectives,including enterprise value,operating performance and bankruptcy risk,and related models are built from these three angles for empirical analysis.In the model,the explanatory variables corresponding to three angles are Tobin Q value,Total performance index(TPI)and Z-score.Among them,the TPI value is obtained by using factor analysis to reduce the dimensionality,and other indicators used are also optimized based on previous studies.The empirical results show that both the total pledge of the company and the pledge of the controlling shareholders significantly improved operating performance and reduced bankruptcy risk.For the economic consequences on the company value,it shows that only the total pledge ratio of the company exerts a significant negative impact on it,while the controlling shareholder pledge is not correlated with the company value.According to the empirical results,it is believed that the participating entities in Chinese capital market should have a deeper open mind to the equity pledge of the pharmaceutical manufacturing companies.