Research On The Motivation And Economic Consequences Of Equity Pledge Of Controlling Shareholders Of Poten Environment

In recent years,the environmental protection industry has flourished under the background of green development.PPP business model is also rising rapidly in the environmental protection industry.Under the PPP mode,the cooperation between the government and enterprises has improved the investment efficiency.However,due to the characteristics of the PPP mode,such as large amount of early-stage capital investment and long collection time,while the PPP mode is developing rapidly,the problems of shortage of funds and high debt ratio in the environmental protection industry have also appeared.In 2018,the further implementation of the national deleveraging policy further hindered the financing of the environmental protection industry.At this time,with its unique advantages such as simple handling process,equity pledge has become one of the financing methods favored by the controlling shareholders of many environmental protection enterprises.The phenomenon of equity pledge of controlling shareholders is very common,the pledge proportion is gradually increasing,and the controlling shareholders of enterprises have pledged their shares in full.The controlling shareholder’s equity pledge can alleviate the capital pressure of the enterprise to a certain extent,but the high proportion of equity pledge will still bring relevant risks to the enterprise and even the capital market.In addition,the controlling shareholders often infringe the rights and interests of minority shareholders by means of equity pledge.Therefore,it is of practical significance to study the specific motivation and economic consequences of controlling shareholders’ equity pledge.This paper selects poten environment as a case study.Based on the concept definition and related theories,this paper uses the method of case study to study the stock disclosure motivation and economic results of poten environmental control shareholders,literature study method,event study method and comparative study method.The study found that:(1)the motivation of controlling shareholders’ equity pledge is related to the PPP model and the characteristics of equity pledge.Because PPP has the characteristics of large initial investment,poor collection ability and lower return than expected,the controlling shareholders can supplement the capital needs of the enterprise through equity pledge,while avoiding restrictions on sales and dilution of equity.(2)The pledge of controlling shareholders’ equity can cause abnormal fluctuation of enterprise stock price.Moreover,when enterprises make supplementary pledge,the negative reaction of the market will be more intense and last longer.(3)The equity pledge of the controlling shareholder damages the long-term value of the company.The higher the share of equity pledges,the greater the negative impact on the company’s value.(4)The pledge of controlling shareholders’ equity has an adverse impact on enterprise performance.After equity pledge,the controlling shareholders may prefer more radical expansion strategy and looser credit policy.Although the operating income of the enterprise will increase in the short term,the profitability,solvency and operating capacity of the enterprise will decline in varying degrees in the long term.(5)After the pledge of controlling shareholders’ equity,enterprises often fall into liquidity crisis.If enterprises choose to introduce state-owned assets and other strategic investments to seek self-help,this increases the risk of the transfer of corporate control.In view of the above problems and conclusions,this paper puts forward relevant suggestions from the perspective of equity commitment and company management,so as to help the company finance rationally and develop healthily.