A Study On The Motives And Economic Consequences Of The Equity Pledge Of Major Shareholders

With the traditional way of financing becoming more and more difficult for listed companies,equity pledge,a new way of financing,has many advantages,such as faster approval,lower financing cost and so on,which has become the preferred way of financing for many listed companies.The major shareholders of listed companies change the static equity into dynamic capital by means of equity pledge,which solved the company's capital requirements.However,in recent years,the explosion and breach of equity pledge happened frequently in the market,which affected all stakeholders.Therefore,under the background of "Deleveraging" vigorously advocated by the state,China strengthened the policy management of relevant aspects in 2018.But the situation of major shareholders' equity pledge has not been effectively improved.So the real motives and the economic consequences of the equity pledge of large shareholders has become the key points and difficulties of this study.Based on the case study,this paper takes the equity pledge of Xinguang Yuancheng's major shareholders as the research object,and concludes that there are three motives for the major shareholders to carry out equity pledge financing:The first motive is to meet the company operation's capital requirements;The second motive is to maintain the control rights of the major shareholders;The last motive is that the major shareholders encroach on the company's interests.In addition,the financial analysis method and Tobin Q-value calculation method are used to analyse the economic consequences of the equity pledge of major shareholders to the company's operating performance and company value,and the harmful economic consequences of the equity pledge of major shareholders to other shareholders and pledgees are analyzed in detail.Finally,according to the analysis of the motives and economic consequences of major shareholders' equity pledge,this paper puts forward corresponding suggestions on the external market supervision and the internal control of listed companies,in order to make the major shareholders' equity pledge receive more attention and constraints.On this basis,the listed companies can not only avoid the adverse impact of major shareholders' equity pledge,but also can benefit from it.