Research On The Impact Of Controlling Shareholder’s Equity Pledge On Corporate Financial Performance

In recent years,the stock pledge problem of listed companies has been an important factor troubling the A-share market.The risk mitigation of stock pledge of listed companies is also one of the important works of the central and local financial regulatory authorities.In the Opinions on Further Improving the Quality of Listed Companies issued by The State Council in 2020,in terms of solving prominent problems of listed companies,it is also clearly proposed that the risk of stock pledge of listed companies should be actively and steadily resolved.It was also pointed out in the 2021 system-work-conference of CSRC that although the stock pledge risk of listed companies has achieved substantial results,we still need to consolidate and deepen the results of stock pledge risk management.The shares of China’s A-share listed companies are relatively concentrated,which usually are held by the controlling shareholders.Therefore,it is of special practical significance to study the stock pledge behavior of controlling shareholders,which has great power of control and discourse over the company.This paper takes A-share listed companies in China as the research object,empirically analyzes the financial statements and public data of listed companies,and draws the following conclusions:(1)Equity pledge behavior of controlling shareholders has A negative impact on corporate financial performance,and significant "tunneling effect" on listed companies.(2)Further research finds out that the controlling shareholders’behavior of equity pledge may reduce corporate financial performance by tunneling listed companies through related transactions.(3)Through in-depth analysis,effective internal control and external supervision may reduce the risk of pledge by controlling shareholders and have a positive regulatory effect on corporate financial performance.Based on studying the influence of controlling shareholders’ equity pledge behavior on corporate financial performance,this paper deeply analyzes the mediating effect and moderating effect factors,trying to provide reference for relevant supervision and management institutions to formulate policies and guidelines,to strengthen the supervision of equity pledge behavior of listed companies.This effort will prevent controlling shareholders from embezzling listed companies’ assets through equity pledge and resolutely safeguard the interests of small and medium investors.Meantime,it also provides the basis for company risk control and promotes the sustainable and healthy development of the companies.