Research On The Usurpation Of Interests Of Controlling Shareholders Under Equity Pledge

In recent years,because the financing method of equity pledge has the characteristics of convenience and low cost,it has been used by more and more listed companies as a means to obtain funds.Through equity pledge,the controlling shareholders can turn their own equity into fresh cash flow,realize the effective utilization of funds,and alleviate the financial difficulties of the enterprise itself and its controlling shareholders.Although most of the time,equity pledge is regarded as the financing problem of shareholders themselves,which is difficult to be directly connected with the operation of the company,through some research,it is found that the controlling shareholders of enterprises have the motivation of interest occupation under the background of high proportion equity pledge,which will have a certain impact on the whole company and its minority shareholders.Therefore,the author raises the following questions: why does the controlling shareholder move towards interest embezzlement after pledging a high amount of equity? What is the mechanism of these encroachments? What kind of usurpation of interests will the controlling shareholders produce? What are the economic consequences for the small and medium-sized shareholders of the enterprise and the enterprise itself? This paper will take Yan’an Bikang as a case to study the above problems,which has important significance and research value for enterprises to protect their own and minority shareholders’ interests from being plundered by controlling shareholders,maintain a good equity pledge order in the economic market,and make equity pledge play its positive effect.Firstly,this paper combs and studies the literature of previous scholars on equity pledge,interest embezzlement and the economic consequences,and establishes the research idea of this paper based on the principal-agent theory and information asymmetry theory;Then,taking Yan’an Bikang as the case study object,this paper uses the methods of literature research,quantitative analysis and event research to analyze the process,characteristics,motivation of Yan’an Bikang’s equity pledge,as well as the action mechanism and specific means of interest embezzlement under the equity pledge,and makes an in-depth study on a series of problems caused by the interest embezzlement carried out by its controlling shareholder Li zongsong and others after pledging their large equity.Through analysis,it can be seen that Li zongsong and other controlling shareholders began equity pledge at the beginning of Yan’an Bikang backdoor listing in 2015.At first,they obtained funds for enterprise development.However,with the increasing proportion of pledge and the asymmetry of information between controlling shareholders and minority shareholders,on the one hand,there will be a large gap between controlling shareholders’ control right and cash flow right;On the other hand,it will reduce the cost paid by the controlling shareholders for hollowing out the enterprise,which enhances the motivation of the controlling shareholders to try to occupy the interests of the enterprise.Based on this,Li zongsong and other controlling shareholders soon began to encroach on the interests of the enterprise through the occupation of funds by related parties,financial fraud and reduction of shares.This series of behaviors led to the decline of Yan’an Bikang’s share price,market value,financial indicators and the loss of the interests of minority shareholders.This is mainly due to the over concentration of Yan’an Bikang’s own equity structure and the defects of internal control mechanism;Finally,based on the interest encroachment of Yan’an Bikang,this paper puts forward a series of preventive measures and suggestions for Yan’an Bikang and its peers from the three levels of investors,regulators and listed companies.