Equity Pledge?Institutional Investour's Shareholding And The Downside Risk Of Stock Prices

Chinese capital market starts late and develops for a short time.There have been many times of abnormal downward stock price.Stock price is a response to the market value of enterprises,reflecting the market's evaluation of enterprises.If the stock price continues to decline,there will be serious harm to investors,enterprises and capital market.As a result,investors will shrink their assets and lose their wealth.In order to stop the consecutive loss,they will sell off their stocks in large quantities.As a result,enterprises will suffer from the impairment of market value,loss of goodwill and increase the difficulty of financing.As a result,the continuous sharp decline of stock price in the capital market will hinder the development of the capital market,and the spread of investor panic will increase the volatility of the capital market.The development of equity pledge has broadened the financing channels of enterprises.The equity pledge financing speed is fast,which does not affect the exercise of the decision-making power of stocks.The major shareholders can still play the same role in the decision-making.There are not too many restrictions on the pledged stocks,and some stocks that restrict the circulation can also be the target.The advantages of equity pledge make it accepted by more and more shareholders.But as a double-edged sword,it has its inevitable negative impact.Stock pledge will have an impact on corporate performance and stock price.Institutional investors,as the main investors in the market,developed rapidly in 2001.They play an active role in supervising the target enterprises,increasing the proportion of investment in the market and playing an important role.Therefore,this paper studies the impact of equity pledge on the downward risk of stock price in the capital market,and further studies the impact of institutional investors' Shareholding on the relationship between equity pledge and downward risk of stock price.The research of this paper enriches the relevant literature of the impact of equity pledge on the capital market and provides theoretical support for the maintenance of the capital market.This paper collects the data of A-share listed companies in Shanghai and Shenzhen stock markets from 2013 to 2018.Based on the herding theory,financing priority theory,efficiency supervision theory and information asymmetry theory,it puts forward three hypotheses of this paper,and uses Stata software to make multiplelinear regression for the collected samples.The empirical results show that:(1)the major shareholders' equity pledge will increase the downward risk of stock price,and the proportion of major shareholders' equity pledge is positively related to the downward risk of stock price.The higher the proportion of equity pledge is,the higher the downward risk of stock price is,and the lower the proportion of equity pledge is,the lower the downward risk of stock price is;(2)the institutional investors' shareholding can reduce the downward risk of stock price,with the increase of the proportion of institutional investors' shareholding(3)institutional investors' holding can negatively regulate the relationship between stock pledge and stock price downside risk.The higher the proportion of institutional investors' holding,the stronger the regulatory effect.The research of this paper enriches the research on the related fields of stock price downside risk,and provides a new way of thinking for the major shareholders to correctly use the equity pledge as a financing method,strengthen the development and construction of institutional investors,maintain the stability of the capital market,and promote the coordinated development of the participants and the market in the capital market.The study of equity pledge promotes the agreement between pledgor and pledgee,and makes this financing way more mature.