Research On The Impact Of Controlling Shareholders' Equity Pledge On Corporate Investment Decisions

In recent years,equity pledge is favored by shareholders because of its fast financing,simple procedures,and easy realization of cash,and has become an emerging financing tool for shareholders in the capital market.Among them,the controlling shareholders have become the "main force" of the equity pledged market,whose high frequency and high proportion of equity pledged behavior has attracted widespread attention from market participants and scholars,and has caused a wave of research on the motivation and economic consequences of equity pledged.The controlling shareholder's equity pledge is not only their own financial behavior,because this behavior may cause the risk of control transfer,which will be transmitted to the equity pledged enterprise and affect the financial decision of the enterprise.As an important part of corporate financial decision-making,investment decision-making directly affects the company's operating risk and value creation.Therefore,based on the background of the normalization of controlling shareholder's equity pledge,the distortion of corporate investment structure and the serious inefficient investment phenomenon,this thesis discusses the influence of controlling shareholder's equity pledge on corporate investment decisions.This thesis first reviews the relevant factors of corporate investment decisions and the influence of equity pledge on corporate financial decisions.Then it refines the controlling shareholder's equity pledge and corporate investment decisions from classic theories such as information asymmetry theory,principal-agent theory,and private benefits of control theory.This thesis also elaborates on the institutional background of controlling shareholder control and the financialization of entity enterprises.Based on this,a theoretical analysis framework for controlling shareholder equity pledge and corporate investment decisions is constructed.Then,comprehensively using descriptive statistics and multiple linear regression and other methods,empirically explored the influence of controlling shareholder's equity pledge on corporate investment decisions.Empirical results show that:(1)the controlling shareholder's equity pledge improves the level of corporate financial investment,and this phenomenon is more obvious in the "bull market" market;(2)the controlling shareholder's equity pledge reduces the level of corporate industrial investment;(3)the controlling shareholder's equity pledge reduces the investment efficiency of enterprises,and this phenomenon is more obvious in non-state-owned enterprises;(4)the controlling shareholder's equity pledge not only exacerbates the overinvestment caused by agency conflicts,but also worsens the underinvestment caused by financing constraints.Finally,according to the conclusions,it puts forward countermeasures and suggestions to enterprises,regulators and financial institutions.Based on the background of China's special system,this thesis takes enterprise investment decision as the starting point,and subdivides it into investment structure and investment efficiency.It comprehensively and effectively reveals the influence mechanism of controlling shareholder's equity pledge on corporate investment decision and extends the private benefit of control.This thesis enriches the research on the economic consequences of controlling shareholder's equity pledge,and provides an empirical basis for the company's supervision and governance of controlling shareholder's equity pledge behavior and the optimization of its internal investment decision-making mechanism.