Study On The Risk Of Shareholder’s Equity Pledge Of Dongxu Optoelectronics

In recent years,China’s capital market has developed rapidly and the company’s financing channels have gradually diversified.As equity pledges can solve the capital shortage of listed companies without selling equity,there is no change of controlling right and voting right due to the reduction of holdings,and it also reduces the secondary market pressure brought by the sale of equity due to capital tension,so it is highly sought after in the market.However,although equity pledges can alleviate the financial pressure of listed companies,the series of risks brought by them should not be underestimated.In China,since the laws and regulations on equity pledging are not particularly well-developed,the cost of mistakes by controlling shareholders of listed companies is relatively small compared to the benefits they receive,which can be seen from the frequent outbreaks of equity pledges in the market in recent years.In the literature so far,most of the studies have been conducted using empirical analysis on the motivation of equity pledges,the control of shareholders,the impact on company operations and the risk impact on share price fluctuations,but relatively few have been conducted specifically on the equity pledge-related situation of a listed company.Based on this paper,Dongxu Photoelectric Technology Co.,Ltd,a representative company in the electronic components industry among A-share listed companies,is selected for analysis,and the case study is used to identify the risk points of equity pledge financing,explain the consequences and causes of the risks,and finally propose preventive suggestions.Based on the review of domestic and international literature,this paper composes the concepts and theories related to the risk of equity pledge financing.On this basis,the current situation of equity pledges of listed companies in China is analyzed in terms of overall scale and industry distribution,and the types of risks of equity pledges are summarized from three subjects: pledgor,pledgee and company.Dongxu Photoelectric is selected as a case study,and the basic situation of the company and the current situation of equity pledges are introduced firstly.Secondly,from the three perspectives of the pledgee,the pledgee and the company,the risks that may be caused by the controlling shareholder of the company’s equity pledge financing are analyzed,and then the causes of the risks are further analyzed,and the results can be attributed to three points,namely,the high concentration of equity,the high percentage of pledged shares and the excessive M&A activities of the company.Finally,specific prevention recommendations are made to the pledgee,the pledgee,the company and the regulator based on the findings of the case study.For the pledgee,it should open a precautionary capital account before carrying out equity pledge business,and strictly control the pledge ratio and pledge frequency when carrying out business;for the pledgee,it should carefully examine the pledgee’s qualification before signing the equity pledge contract with the pledgee,and add additional terms and conditions when signing the contract to simplify the operation procedures to protect its own interests;for the company,it should first For the company,it should first establish a sound mechanism of equity checks and balances within the company,and then formulate a reasonable strategic plan to strive to improve the company’s performance;for the regulator,it should strictly regulate the information disclosure system of listed companies,stipulate the details of disclosure in detail,severely punish irregularities of equity pledges,eliminate the occurrence of undesirable events to the maximum extent possible,and create a good market environment.