Case Study On The Financial Risk Of Equity Pledge Of The Controlling Shareholder Of Oriental Landscape

In recent years,with the development of the market,the stock pledge transaction has attracted more and more attention of the controlling shareholders of listed companies,and has gradually become an important way for them to finance.However,the development of the domestic market is not mature enough,and the relevant laws and regulations are not perfect enough,which leads to a greater risk in the equity pledge transaction,especially in the case of LETV’s stock explosion,which makes people realize the risk problems in the equity pledge.However,in the market,most of the controlling shareholders’ equity pledge companies have not yet exposed the crisis.Equity pledge can change the company’s business activities and environment,which will increase the company’s financial risk level and cause market fluctuations.For other market participants,especially small and medium-sized shareholders,this kind of impact is very worthy of attention.Therefore,how to resist the financial risks caused by equity pledge to listed companies and how to deal with the possible risks of equity pledge are of great significance to improve the stability of the company and the overall market.Based on the information asymmetry theory and principal-agent theory,this paper analyzes the motivation of equity pledge of listed companies,such as the lack of funds and financing channels,the existence of related transactions and related guarantees,and the impact of equity pledge on their own financial risk.This paper discusses the change of financial risk after the pledge of controlling shareholders’ equity and the negative impact of the pledge of controlling shareholders’ equity on the operating environment of listed companies,such as over investment,related party transactions and other aspects of financial risk analysis.Finally,this paper analyzes the financial risks of listed companies caused by the pledge of controlling shareholders’ equity from four aspects: investment,financing,liquidity and income distribution.After the research and demonstration,the conclusion is drawn that many times and large-scale equity pledge by controlling shareholders will lead to the increase of financial risk of listed companies.Finally,in terms of the organizational structure of Oriental Landscape and the supervision of the external market,some suggestions are put forward to prevent and resolve the possible financial risk brought by the equity pledge of controlling shareholders.