Research On The Influence Of Equity Pledge Of Controlling Shareholders On Stock Price Of Listed Companies

On December 6,2019,General Secretary Xi Jinping presided over a meeting of the Political Bureau of the CPC Central Committee,stressing efforts to stabilize employment,finance,foreign trade,foreign investment,investment and expectations.Since equity pledge entered the exchange in 2013,the equity pledge process has become more standard and fast,gradually favored by major listed companies,and now has become a common phenomenon in the capital market.However,due to the volatility of the capital market,the stock price of listed companies is unstable,which makes the collateral value drop,and brings about forced liquidation of positions and other risks.In recent years,the frequent occurrence of "bursting events" has greatly impacted the stability of the capital market,which has aroused great attention from financial management,financial institutions and academic circles.This paper makes an in-depth study on the logical relationship of controlling shareholder’s equity pledge event affecting the stock price of listed companies.The research conclusion has important theoretical significance and practical value for maintaining the stability of capital market and regulating the behavior of controlling shareholder.This paper takes the equity pledge of controlling shareholders of Shanghai A-share market from 2013 to 2020 as the research object,and tests the short-term effect and long-term impact of announcements.First of all,the literature related to equity pledge is sorted out and summarized,and the concepts related to equity pledge are defined,the development background of equity pledge is analyzed and the status quo is analyzed through charts.Then,the research hypothesis is put forward through relevant theories to pave the way for empirical analysis.Finally,empirical research is divided into two parts: first,the controlling shareholder equity pledge announcement effects of short-term research,in 2013-2020 Shanghai A shares of controlling shareholders equity pledge event samples,adopt event study inspection notice if there is A pledge of negative abnormal returns,and explore different nature and pledge equity rules follow what is the difference between before and after the sample;Second,the influence of controlling shareholder’s equity pledge on stock return rate.The fixed effect model is used to test the equity pledge of controlling shareholders of Shanghai A-share market from 2013 to 2020,and the differences of different equity nature,before and after the issuance of new pledge rules and different cumulative pledge rates are explored.Through theoretical analysis and empirical research,the following conclusions are drawn :(1)controlling shareholder’s equity pledge has a negative impact on stock price;(2)From the short-term effect analysis,the negative announcement effect of state-owned enterprises is smaller than that of non-state-owned enterprises,but from the long-term impact analysis,the negative impact of state-owned enterprises is more significant than that of non-state-owned enterprises on stock return rate;(3)Before and after the release of the new regulations,the negative effect of the new regulations on stock prices is weaker than before;(4)When the shareholder pledge rate is higher than 50%,the controlling shareholder’s equity pledge has a more significant negative effect on the stock return rate.Based on the conclusions obtained in this paper,suggestions are put forward from the following aspects :(1)regulatory authorities should improve relevant laws and regulations according to the market development,strengthen the information disclosure system,reduce the occurrence of systemic risks,and maintain the steady development of the capital market;(2)Listed companies should strengthen self-management,strictly implement transparent information disclosure and reduce information asymmetry.State-owned and non-state-owned companies should improve their governance according to different situations;(3)In the capital market,equity pledge by controlling shareholders is a common behavior of refinancing of listed companies.Investors should treat it rationally,avoid blindly following it,establish correct investment concepts and guard against investment risks.