Empirical Study On The Influence Of Controlling Shareholders’ Share Pledge On Real Earnings Management

Equity pledge has become a normal financing method.Compared with other financing methods,equity pledge has the advantages of lower financing cost,faster financing speed and no influence on control rights.In 2013,securities brokers joined the equity pledge market,which greatly promoted the development of equity pledge business.A-share market even appeared the situation of no shares without pledge.Equity pledge relies the financing difficulties of controlling shareholders and listed companies to a great extent,but the high proportion of equity pledge by controlling shareholders is also accompanied by high risks.The decline of stock price may cause forced liquidation and the transfer of control rights.Therefore,after equity pledge,controlling shareholders have a strong incentive to use real earnings management to manage market value in order to stabilize the stock price.In recent years,the stock right explosion happens from time to time.How to restrain the behavior of controlling shareholders and prevent the risk of stock right pledge becomes the key problem in capital market.In this context,it is of great theoretical and practical significance to study the influence of holding equity pledge on real earnings management.Based on information asymmetry theory and PBC theory,this paper focuses on the influence of controlling shareholder’s equity pledge on real earnings management,and further analyzes the moderating effect of board governance on the relationship between the two.A-share listed companies from 2013 to 2020 were selected as research samples,and statistical software STATA15.0 was used to conduct descriptive statistics,correlation analysis,regression analysis to verify research hypotheses and robustness test.The empirical results show that :(1)there is a positive correlation between the equity pledge ratio of controlling shareholders and the degree of real earnings management;(2)The expansion of board size can weaken the positive correlation between the two;(3)The combination of the two positions and the shareholding of the board of directors strengthened the positive correlation between them;(4)The proportion of independent directors has no significant influence on the relationship between the two,but the increase of the proportion of "academic" independent directors can weaken the positive correlation between the two.Based on the above research results,the paper puts forward countermeasures and suggestions from the aspects of perfecting board governance,perfecting the risk management and information disclosure of equity pledge,strengthening the supervision of real earnings management and so on,in order to standardize the equity pledge behavior of controlling shareholders,protect the interests of small and medium investors,and promote the high-quality development of capital market.The main contribution of this paper lies in: theoretically,it improves the research on the relationship between controlling shareholder’s equity pledge,real earnings management and board governance,and expands the research on controlling shareholder’s equity pledge to real earnings management’s specific methods.In practice,it provides reference opinions for standardizing equity pledge from two perspectives of board governance and external supervision of the companies.