A Case Study On Controlling Shareholder’s Equity Pledge Of Zangge Mining

In recent years,the scale of equity pledge of domestic listed companies has risen significantly.Controlling shareholders generally adopt a high proportion,multi frequency and new equity pledge mode,which brings a series of pledge risks to the company.As the stock pledge in the A-share market frequently exploded,the controlling shareholders frequently reduced their holdings at a high level,hollowed out the company and violated their interests after the stock pledge,which not only damaged the interests of small and medium-sized shareholders and other investors,but also damaged the value of the company,and the stock price plummeted and was on the verge of delisting.Therefore,in-depth research on the pledge of controlling shareholders’ equity,analysis of their pledge motives and negative effects,and exploration of countermeasures will not only help companies prevent the risk of equity pledge,but also guide equity pledge to become a useful and flexible means of financing,which has strong practical significance for listed companies,pledgee and other stakeholders.This paper selects the representative Zangger Mining as the case company,analyzes the pledge motivation and financial consequences of the controlling shareholders,and puts forward problems and suggestions.Firstly,based on the principal-agent theory,signaling theory and private control theory,this paper defines the concepts of control right,cash flow right and equity pledge,forming a basic theoretical framework;Secondly,it objectively describes the basic situation,equity pledge process and current situation of the case company Zangger Mining;Thirdly,the motivation of the equity pledge of the case company is deeply analyzed through the situation of capital occupation,and the mechanism of the financial consequences of the equity pledge of the controlling shareholder is explored.The financial consequences of the equity pledge are systematically studied using the event study method,comparative analysis method and Tobin Q value;Finally,combined with the problems obtained from the case analysis,the paper puts forward targeted countermeasures and suggestions from the four aspects of controlling shareholders,internal governance,risk management and control,and information disclosure.The study found that the controlling shareholders of Zangger Mining pledged their shares mainly out of the motivation of financing needs,transfer risks and interest encroachment,which brought negative financial consequences to the company by evading performance commitments,providing huge guarantees in violation of regulations,transferring assets through related transactions,and whitewashing non operating accounts in statements.Its mechanism is reflected in the separation of control rights and cash flow rights,which not only directly led to the decline of the company’s financial performance level,It also causes the company’s market performance to be negative and the company’s value to drop precipitously.We should restrict the pledge behavior of controlling shareholders,strengthen the internal governance and supervision of the company,improve the pledge risk early warning mechanism,and improve the quality of the company’s information disclosure.