A Research On Motivation And Economic Consequences For Meijin Energy’s Equity Pledge

In recent years,equity pledge,as a new financing method in the capital market,has been favored by shareholders of listed companies due to its convenience and efficiency.The implementation of on-site pledge business had promoted the vigorous development of equity pledge,which reached its peak in 2018.Equity pledge can turn stationary shareholders’ equity into active resources without weakening shareholders’ control rights.Therefore,it is favored by shareholders of listed companies.However,our country’s current supporting regulatory policies are not yet perfect.With the fluctuations and changes in the market environment,the risks of equity pledges continue to emerge,triggering heated discussions in the capital market.Therefore,the thesis intends to explore the equity pledge behavior of listed companies and its impact through case analysis,and provide some reasonable suggestions on the sound development of equity pledge business.The thesis selects Meijin Energy as the case study object on the basis of literature and theoretical research,and discusses the intention,the influence path,and the economic consequences of Meijin Energy’s equity pledges.The study found that the main reasons for the pledge of Meijin Energy’s equity are three aspects: supplementing operating,mergers and acquisitions funds,consolidating the position of control,and encroaching on the interests of listed companies.Equity pledge mainly affects listed companies through capital investment path,corporate governance path and dividend distribution path.Subsequently,the paper demonstrates that the CAR during the equity pledge window period will significantly decrease,indicating that its short-term market reaction is negative and not favored by investors.Through the financial indicator analysis,Du Pont analysis and comprehensive performance analysis from 2016 to 2020,it is found that eventually its long-term comprehensive performance continued to decline.The exposure to the inherent risks of equity pledges has led to a significant decline in its long-term financial performance.Research on Tobin’s Q value shows that Meijin Energy’s equity pledge is not favored by the capital market in the long run,and the increase in the pledge ratio will only further detract from the company’s value.Finally,based on the research results,the thesis proposes recommendations on the equity pledge business for the case company,government regulatory agency and investors.