A Study On The Influence Of Stock Pledge Of Controlling Shareholders On Corporate Bonds

In recent years,equity pledge has developed rapidly in China and become an indispensable part of corporate financing.According to wind database statistics,during 2014-2019,the proportion of shares with equity pledge behavior in China's A-share market is more than 90%,and equity pledge business is more and more common in China's stock market.Equity pledge is essentially a financing method of mortgage financing.Shareholders of listed companies obtain funds by pledging their shares to securities companies,banks or trust institutions,and agree to repay the principal and interest at the same time.If the principal and interest cannot be repaid at the expiration,the pledgor can obtain compensation by selling the pledged shares.Shareholders do not lose the ownership of the Pledged Shares while pledging the shares.They still have the right to participate in the decision-making and voting of the company's operation.At the same time,equity pledge also has the advantages of convenient operation and low financing cost.Therefore,equity pledge is widely loved by investors.However,the stock pledge business in China's A-share market has made great progress,but also brought potential crisis.The stability of stock price is the premise to ensure the success of pledge.If the stock market is not stable and the price of pledged stock drops to the closing line of pledge substantially,the enterprises with high proportion of equity pledge will face the risk of closing or even bursting their positions,and the pledged shareholders will face the risk of losing the control right of stock after the compulsory closing of pledged stock,which makes the control right of listed companies transfer.Bond market is an important direct financing channel for Chinese enterprises and an important source to support the real economy financing,and it is still developing rapidly.The scale and quantity of bond issuance are basically increasing year by year.At present,the total scale of China's bond market has been ranked second in the world bond market,so it is particularly important to study the risk factors affecting the bond market.The existing literature in our country has shown that the pledge behavior of the controlling shareholders will affect the corporate value,corporate performance and financial situation,and these factors will also affect the bonds of listed companies.Therefore,this paper will explore whether the pledge behavior of the controlling shareholders will affect the credit rating and default of corporate bonds from an empirical perspective.In this paper,first of all,the newly issued corporate bonds of Listed Companies in the period of 2007-2019 will be selected as the research object according to specific conditions,and the credit rating of newly issued corporate bonds of listed companies will be measured and changed according to specific rules as the explained variable.The explained variable is whether the controlling shareholders pledge and the proportion of the accumulated Pledged Shares of the controlling shareholders in the shares of the issuing companies they hold 11 control variables are selected to construct the model.After simple descriptive statistics,Pearson correlation test,OLS regression and logit regression,the two-stage least square(2SLS)estimation is used to ensure the robustness of the results.Based on the empirical results,it is shown whether the equity pledge behavior of the controlling shareholders will affect the new issuing companies The credit rating of the debt has a negative impact.The explained variables are replaced by whether the corporate bonds are in default,and the explained variables remain unchanged.The 11 control variables selected above are selected as alternatives.After relevant analysis,the model is rebuilt,and regression is conducted again to determine whether the equity pledge of the controlling shareholders will make the corporate bonds more prone to default.Through the relevant theoretical analysis of the mechanism of pledge activities on the bond market,combined with the empirical test,this paper draws the following conclusions:(1)controlling other situations,the controlling shareholders' equity pledge behavior will make the newly issued corporate bonds of listed companies obtain lower credit rating.(2)Controlling other situations is the same,the stock pledge of controlling shareholders will make the corporate bonds issued by listed companies more likely to default.The research results of this paper have important reference value for corporate bond investors,credit rating agencies and controlling shareholders.