A Research On The Relationship Between Controlling Shareholder’s Equity Pledge And Stock Price Crash Risk

The development of laws and regulations related to equity pledge in China started in 1995.After more than 20 years of development,this behavior has become one of the main ways of financing.As of January 1,2022,the financing method of equity pledge has been adopted by many companies.There are 3,141 a-share companies in my country except the science and technology innovation board and the growth enterprise market,of which 1,629 companies have equity pledge,accounting for 51.86%,1 167 companies have equity pledge by controlling shareholders,accounting for 37.15%.Among these 1167 companies,the cumulative number of pledged shares accounts for less than 20%of the total share capital,the number of companies is the largest,with 879 companies,accounting for 75.32%of the total sample.In addition,as the ratio continues to increase,the number of companies also decreases.First of all,this thesis studies relevant literature and finds that scholars generally believe that companies with controlling shareholder’s equity pledge are more prone to share price crash risk.Then,based on this logical chain,accounting conservatism is taken as the intermediary variable between controlling shareholder’s equity pledge and share price crash risk.Secondly,this thesis makes statistics on a-share listed companies from 2007 to 2019 to understand the current situation of controlling shareholder’s equity pledge,and based on this,puts forward relevant hypotheses.Finally,this thesis makes a nonlinearity test,and further studies the applicability of the conclusions under different corporate growth and property rights.At the same time,this thesis considers the possible endogenous problems.The theoretical and practical significance are constantly enriched in this research process.This thesis takes the non-financial a-share listed companies with controlling shareholders’ equity pledge at the end of the year in my country’s Shanghai and Shenzhen stock markets from 2007 to 2019 as a research sample.Based on the theory of information asymmetry,principal-agent theory,signal transmission theory and contract theory,the normative research method is adopted and empirical analysis.The research results show that with the increase in the proportion of controlling shareholders’ equity pledge,the risk of stock price crash increases,accounting conservatism plays a mediating effect between the two,and the intermediary effect of accounting conservatism is significant in companies with a high degree of growth and companies with non-state-owned property rights.The innovations of this thesis are as follows:first,the existing literature has yet to study accounting conservatism as intermediary variable,accounting conservatism to join this a chain can be more in-depth,the explain the transmission relationship between variables and is interpreted more clearly,to develop the depth of the current study;second,the two different perspectives in the further test are of practical and guiding significance,these conclusions can also be taken as a reference for the existing controlling shareholder equity pledge companies,which can promote better and faster development of the company;third,through the grouping test of the intermediary effect of accounting conservatism in the dimension of financing constraints,it is clear that speculation is not the main reason for the high equity pledge and the risk of stock price collapse,while financing constraints not only make enterprises form high equity pledge,but also reduce accounting conservatism by timely confirming the news beneficial to them or delaying the confirmation of the news unfavorable to them,resulting in a significant increase in the risk of stock price collapse.