External Governance Environment, Controlling Shareholder's Equity Pledge And Investment Efficiency

Most enterprises will encounter difficulties in financing during their development,and equity pledge as a new financing method has begun to be favored by enterprises.However,equity pledge may actually bring risks.For example,when the price of the pledged stock falls to the warning line and cannot provide guarantees,the pledged stock will be sold in the secondary market.If the pledged equity is too large,the controlling shareholder may lose control.As one of the “three carriages” that drives the economy,investment plays a important role in promoting the healthy development of the national economy,and it is also a very important link in business decision-making.Inefficient investment has been a problem to be solved by listed companies,and it is also a subject that scholars focus on.After the controlling shareholder pledged the equity,the degree of separation of the two powers was exacerbated,which might strengthen the controlling shareholder's encroaching effect of seeking private interests,and may also change the degree of financing constraints and risk appetite,which may affect the investment efficiency of the enterprise.The empirical research shows that a favourable external governance environment may have an important impact on the investment decisions of listed companies,which can effectively constrain the agency problems caused by the separation of the two powers within the enterprise,and effectively alleviate the financing constraints,which in turn may have The relationship between shareholder's equity pledge behavior and corporate investment efficiency has an impact.This paper sorts out the literature on motives and economic consequences,investment efficiency and external governance environment of equity pledge,and clarifies the relevant theoretical basis of this article,and then puts forward hypotheses on this basis.This article uses the data of A-share manufacturing companies in Shanghai and Shenzhen in 2011-2018 as the initial research sample to discuss whether the pledge of controlling shareholder equity will affect the investment efficiency of the company.It is divided into two groups: overinvestment and underinvestment and investigating separately,and by adding the interactive items of the external governance environment,to investigate whether a good external governance environment will affect the relationship between the controlling shareholder's equity pledge and investment efficiency.The research results of this paper mainly include:(1)The controlling shareholder's equity pledge behavior will aggravate the enterprise's inefficient investment.(2)After adding external governance environment adjustment variables,the coefficient of the interaction term is significantly negative,indicating that a higher marketization level,lower government intervention,and a higher level of rule of law can improve the negative effect of investment equity pledge of controlling shareholders on investment efficiency influences.(3)The eastern region has a good external governance environment.Compared with the Non-Eastern region,it can exert a better external monitoring effect,thus weakening the impact of the controlling shareholder's equity pledge on inefficient investment.(4)Compared with state-owned enterprises,the external governance environment in non-state-owned enterprises has a more significant role in regulating the relationship between controlling shareholder equity pledge and investment efficiency.(5)Further adding the two-in-one variable in internal governance,it was found that the effect of the controlling shareholder's equity pledge on non-efficient investment is more significant in the non-two-in-one combination.The research results in this paper open up a new perspective for the study of investment efficiency,provide an empirical basis for a deeper understanding of how the controlling shareholder's personal behavior affects the company 's investment issues,and provide a reasonable basis for external investors,financial institutions and government departments Suggestions.The paper has 2 pictures,17 tables,and 125 references.