Research On The Influence Of Equity Pledge On Company's Innovation Investment

As a financing method,equity pledge is favored by shareholders for its advantages of fast financing,low financing cost and few restrictive conditions.Therefore,the number and market value of equity pledge in the capital market have also increased significantly.By June 2019,the total number of shares pledged on the Chinese market had reached 614.119 billion,with the market value of 476.966 billion yuan.At the same time,equity pledge financing directly or indirectly inhibits the innovation investment level of the company.On the one hand,during the period of equity pledge,the stock price of the company is directly linked to the control right of the shareholders.When the stock price of the company falls sharply,the controlling shareholders will face the risk of control right transfer.Innovation itself is characterized by risks and long cycle.Once the r&d is interrupted or fails,it will have a negative impact on the company's performance and stock price.Therefore,for the sake of their control power,the controlling shareholders are likely to reduce innovation input.On the other hand,during the period of equity pledge,the shareholders' right of earnings and the control right of the company are separated from each other,which weakens the incentive for shareholders and makes them turn their attention to the assets of the listed company,leading to the decrease of the available capital of the company and crowding out effect on innovation input.Based on relevant literature research on the motivation,economic consequences,risks and factors affecting innovation input of equity pledge,this paper puts forward research hypotheses on the basis of principal-agent theory,signal transfer theory and information asymmetry theory.This paper selects non-financial listed companies in the A-share market from 2014 to 2018 as research samples,explores the equity pledge behavior of controlling shareholders,constructs models of intermediary effect and regulatory effect,analyzes the regulatory effect of transmission mechanism and other variables,and verifies the impact of equity pledge on innovation input.The results show that: 1.Pledge of equity leads to the decline of innovation investment;2.After equity pledge,the company's risk bearing capacity decreases and innovation input is weakened;The incentive of tunneling and encroachment of shareholders is strengthened,and the innovation input is squeezed out.3.The shareholding of controlling shareholders and institutional investors and the monetary policy have a regulatory effect on the innovation input of a company :(1)the smaller the share of the company held by controlling shareholders,the more significant the restraining effect of equity pledge on the innovation input is;(2)Shareholding by institutional investors can alleviate the restraining effect of equity pledge on innovation input;(3)The higher the uncertainty of monetary policy,the stronger the inhibitory effect will be.In view of the above conclusions,this paper puts forward corresponding Suggestions: as policy makers,government departments should avoid frequent adjustment of monetary policy,and strengthen education and training for investors;As an economic entity company,increase the pledge information disclosure clauses and corporate internal governance;For medium and small shareholders and institutional investors,medium and small shareholders should actively exercise their rights,and institutional investors should give full play to their unique advantages in information and strengthen the supervision over the pledge of major shareholders' equity.