The Impact Of Supporting Equity Pledge By Controlling Shareholders Of Tongwei Shares On Corporate Performance

Equity pledge has the characteristics of strong liquidity,low cost and high efficiency,and is deeply favored by major companies and shareholders.However,during the prevalence of equity pledge business,many problems gradually appear in the public view.The savage growth of equity pledge business disrupted the market order,and then the regulatory authorities continued to improve relevant laws and regulations to restrict unreasonable equity pledge and make the pledge business carry out in an orderly manner.There are more and more events of supporting equity pledge in China’s A-share market,but there are few case studies on the supporting equity pledge of major shareholders.Therefore,this paper selects Tongwei shares as the main case object to explore the specific effect of its controlling shareholder’s equity pledge on the value of the company.The case first introduces the process of the controlling shareholder’s equity pledge,and analyzes the motivation of the controlling shareholder’s equity pledge in combination with the company’s production and operation,financial status and development strategy.It is concluded that the frequent pledge behavior of the controlling shareholder of Tongwei shares is to help the development of the company.Then,the event study method is used to observe the investor feedback of major shareholders’ equity pledge information,and the stock price data is used to represent the company’s short-term performance;Using the financial index method,this paper evaluates the profitability,growth,operation and solvency of the controlling shareholders of Tongwei shares in recent five years,so as to obtain the impact of the supporting pledge of major shareholders on the medium-term performance of the company;Select Tobin Q-value method to calculate Tobin Q-value and company value under the background of equity pledge for 10 years,so as to explore the impact of long-term pledge on the company’s long-term performance.Through the case analysis,the conclusion is drawn: in the short term,the rise of stock price and cumulative excess return in the short term after the announcement shows that the controlling shareholder supported equity pledge has a positive short-term effect;In the medium term,the equity pledge supported by major shareholders provides financial support for the transformation and upgrading of the company;In the long run,the circulating equity pledge financing behavior of the controlling shareholders of Tongwei shares ensures the long-term capital source of the company,and the new financing method,as a market value management strategy,plays an important role in boosting the company’s share price.Finally,according to the detailed analysis and research results of the case,some suggestions are put forward.China’s major companies and shareholders should abide by laws and regulations and make proper use of the loan method of equity pledge to help the development of the company.The company itself should strengthen internal management and improve operation efficiency;Investors should enhance the real motivation to identify the equity pledge of major shareholders and safeguard their own rights and interests;China’s relevant regulators should build a complete information disclosure system of equity pledge to ensure the orderly operation of the capital market.