Case Analysis Of Behavior And Impact Of Listed Companies Hollowed Out By Major Shareholders' Equity Pledge

In recent years,the equity pledge has become an emerging financing method favored by listed companies due to its easy realization and easy operation.For large shareholders,the equity pledge can enable the large shareholders to maintain the control of the listed company while achieving the financing purpose.In addition,they can also use restricted sales shares for financing;for the pledgee,the pledged equity of the listed company Because of its strong liquidity,it is easy to monetize,and it is also popular with pledgees.However,equity pledge financing is not a profit without harm.In fact,equity pledge financing has certain risks for both large shareholders and pledgees: The risk of large shareholders is mainly reflected in the transfer of control rights that may be brought by the equity pledge;the risk of the pledgee is mainly reflected in the risk of the stock price of the pledged shares and the moral hazard of the large shareholders.And compared to A-share listed companies,duo to the late establishment of the New Third Board,the lagged construction behind the mainboard market,Listed companies on the New Third Board are more prone to problems such as imperfect internal governance mechanisms.Therefore,companies on the New Third Board are more likely to use various methods to encroach on the interests of listed companies after pledged equity.In addition,the laws and regulations on the pledge of equity in my country's "Guarantee Law" need to be further improved,and the lack of the law is likely to be the reason for the successful realization of the hollowing out behavior of the large shareholder after pledge of equity.In academic circles,studies on the pledge and tunneling behavior of large shareholders are plenty,but there is less literature referring to the behaviors and effects of liquidation of listed companies after the pledge of large shareholders' equity in NEEQ companies using case analysis methods.Therefore,it is necessary to explore the means and reasons of emptying the listed company after the pledge of the major shareholders of the New Third Board Enterprise in combination with actual cases and analyze its impact involving the company,the market,and stakeholders.It provides a theoretical basis for improving the major shareholder equity pledge system and regulating behaviors of major shareholders as well as healthy development of equity pledge of listed companies in China.It is also helpful to provide reference cases for investors to invest in listed companies that pledge equity.This paper adopts methods of literature research and case analysis.In the aspect of literature research,we expound the basic concept,main characteristics and the concept of large shareholders' tunneling.The motivation of large shareholders' equity pledge and the main ways of large shareholders' tunneling listed companies are also summarized.In case analysis,the basic situation of Fengshengyang's company and the previous major shareholder's equity pledge are explained following the introduction of the case of major shareholder's equity pledged of the Fengshengyang and hollowed out behaviors.Next,we describe the methods of hollowing out listed companies in detail.Third,based on the theory of equity pledge and the theory of major shareholder hollowing out,the in-depth analysis of the reasons for the major shareholder's equity pledge to empty the listed company and the reasons for the major shareholder's hollowing out after the equity pledge are implemented.Fourthly,we analyze the impact of major shareholders' emptying behavior after equity pledge on the company,capital market and stakeholders.Finally,through the previous research content,the concrete conclusions of the case study are drawn,and corresponding suggestions are put forward.Several conclusions are drawn as follows: First,equity pledge increases the motivation of major shareholders to hollow out which is based on two aspects: firstly,the pledge of equity has exacerbated the degree of separation of the two rights so as to increase the motivation of large shareholders to hollow out;secondly,equity pledges have further reduced the costs of large shareholders' hollowing out,and have also strengthened the motivation for hollowing out.Because the equity pledge transfers the risk of stock price decline to the pledgee,and the pledgee bears the losses caused when the stock price falls below the pledge price.Second,the imperfect regulatory system of the New Third Board is an external reason that major shareholders have successfully emptied listed companies.Third,the imperfect corporate governance mechanism is the internal reason for the large shareholders to empty the listed company successfully.Fourth,the tunneling behavior of major shareholders has a lot of negative effects on listed companies and capital markets.Fifth,the hollowing out actions of the major shareholders have harmed interests of other stakeholders.Last,we suggest: we should regulate the behavior of major shareholders based on the improved the company's internal governance mechanism;the supervisory authorities should further improve the relevant system of pledge of major shareholders 'equity of the New Third Board Company on the one hand,and increase the punishment ofThe main innovations of this paper are as follows:(1)Both previous studies on equity pledge and on large shareholders' tunneling of listed companies mainly focus on large sample empirical analysis with less case studies.This paper taking Feng Shenyang as a case analyses the tunneling of listed companies after large shareholders' equity pledge,which enriches exist ones.(2)Previous studies in terms of equity pledge and large shareholders tunneling listed companies exclusively pay attention on the main board market companies.While we take the NEEQ companies as the research object,which not only helps to enrich the relevant research of the NEEQ market,but also has a certain reference value for promoting the system construction of the New Third Board Market.