Research On The Influence Of Controlling Shareholder's Equity Pledge On Tunneling Behavior

With the development and improvement of the capital market,equity pledge financing is favored by the shareholders,especially the controlling shareholders,because it can obtain short-term flexible liquidity funds under the premise of maintaining control.But this uniqueness also makes the equity pledge itself contradictory.On the one hand,it can realize rapid financing,which provides a fast way for listed companies,especially private enterprises,to solve the financing problem.On the other hand,since the shareholders only need to pledge the equity to get the flow of funds,so they will not lose control,which is undoubtedly full of temptation for the controlling shareholders.In the case of market instability,the excessive equity pledge of the controlling shareholders not only makes the listed companies bear greater pressure to liquidate their positions,but also faces various risks.At the same time,it will also increase the separation of control right and cash flow right,further aggravate the agency conflict between the controlling shareholder and the minority shareholder,and finally enhance the motivation of the controlling shareholder to empty the interests of the company and the minority shareholder.The tunneling behavior of controlling shareholders not only damages the listed companies’ own profits and solvency,but also directly infringes on the interests of minority shareholders and has a negative impact on the capital market.Therefore,it is urgent to analyze the influence of the pledge of controlling shareholder’s equity on the tunneling behavior,and discuss how to further improve the pledge system and avoid the tunneling behavior of controlling shareholder.This paper mainly adopts the literature research method to collate and analyze the literature of scholars related to the stock pledge and the tunneling behavior of controlling shareholders,and finds that there are not many studies on the combination of stock pledge and tunneling behavior by scholars at home and abroad,and most of them focus on the empirical research.Therefore,this paper adopts the method of case study to select kangmei pharmaceutical co.,LTD.,a company with a high proportion of stock pledge of the controlling shareholder and over-tunneling behavior,and analyzes the internal logic of stock pledge and tunneling behavior based on theoretical research and the actual situation of kangmei pharmaceutical co.,LTD.To be specific: first,the overall situation of kangmei pharmaceutical was summarized and summarized,including the shareholding structure and the pledge of shareholding,etc.It was found that the controlling shareholders of kangmei pharmaceutical had a high proportion of pledge,and they had obvious motivation ofhollowing out.Secondly,it analyzes the evidence of hollowing out of the controlling shareholder from the unprecedented signs of kangmei pharmaceutical,further excavates the means and economic consequences of hollowing out of the controlling shareholder,and discusses the reasons for the successful implementation of hollowing out of kangmei pharmaceutical.Through the research,we found that kangmei pharmaceutical company,on the one hand,USES financial fraud to increase the stock price,on the other hand,when the stock price is high,it pledges a large proportion of shares,so as to further hollow out the company by using equity pledge,forming a vicious circle.Finally,combined with the actual situation and the results of the case study,put forward targeted Suggestions.The research of this paper has some reference significance for the listed companies to prevent the hollowing out behavior of controlling shareholders and to standardize the policy of pledge of stock rights.