Research On The Influence Of Controlling Shareholder’s Equity Pledge On Enterprise Total Factor Productivity

The report of the 19th National Congress of the Communist Party of China pointed out that "China’s economy has changed from the stage of rapid growth to the stage of high-quality development".At present,high-quality development is still the theme of China’s economic and social development in the 14 th five year plan and even longer period,and the improvement of total factor productivity is an important link to realize the high-quality development of China’s economy.As the main body of economic activities,improving total factor productivity and realizing sustainable development of enterprises are the key to promoting high-quality economic development.Improving the total factor productivity of enterprises is inseparable from activities such as optimizing the production chain,improving technical efficiency and increasing R & D investment.These activities all need financial support.Equity pledge has quickly become one of the important ways of financing for enterprise shareholders because of its low threshold and convenient financing,so as to alleviate the capital demand for enterprise shareholders.However,due to the low information transparency of the capital market,the capital flow and purpose of the controlling shareholder’s pledge of equity are unknown.The pledge itself also sends a signal to the market that the enterprise is facing capital constraints,and the decision-making behavior of the shareholders after the pledge may affect the improvement of the total factor productivity of the enterprise.On the one hand,after the pledge of equity,the controlling shareholders face the risk of sharp decline in share price and transfer of control.They are motivated to carry out market value management and take short-sighted actions of short-term performance,controlling R & D investment and reducing long-term capital expenditure;On the other hand,equity pledge separates cash flow right and control right,and the controlling shareholders encroach on the interests of the enterprise for private interests.The short-sighted behavior and interest encroachment of controlling shareholders will affect the normal production,operation and strategic planning of listed enterprises,reduce the production efficiency of enterprises,and affect the development quality and long-term development power of enterprises.In addition,as the basis of corporate governance structure,enterprise ownership structure is a kind of institutional arrangement for allocating enterprise resources and the embodiment of decision-making management mechanism.As a member of the enterprise,different ownership structures also affect and restrict the decision-making and other behaviors of controlling shareholders.Therefore,based on the principal-agent theory,information asymmetry theory and the private interest theory of control,this paper explores and analyzes the impact mechanism of controlling shareholders’ equity pledge on total factor productivity on the basis of combing the existing literature,introduces the enterprise ownership structure,analyzes its effect,and puts forward the hypothesis of this paper.After selecting the data of A-share listed enterprises from 2003 to 2019 and screening and processing,the final research sample of this paper is obtained.After introducing the variables and models adopted,this paper empirically analyzes the relationship between controlling shareholder equity pledge and enterprise total factor productivity,and further explores the role of enterprise equity structure and financing constraints in the relationship between controlling shareholder equity pledge and enterprise total factor productivity.The results show that:(1)the equity pledge of controlling shareholders of listed enterprises reduces the total factor productivity of enterprises,and with the increase of the pledge proportion of controlling shareholders,the inhibitory effect on the total factor productivity is more obvious,indicating that after the equity pledge of controlling shareholders,their short-sighted behavior or interest occupation behavior does have a negative impact on the total factor productivity of enterprises,Moreover,the inhibition is still valid after being tested by robustness test methods such as instrumental variable method;(2)In the proxy index of ownership structure,the degree of equity checks and balances can alleviate the negative correlation between controlling shareholders’ equity pledge and total factor productivity,indicating that the role of checks and balances among corporate shareholders is helpful to supervise and restrict the behavior of controlling shareholders after equity pledge;The ownership concentration and the shareholding of institutional investors strengthen the negative correlation between the controlling shareholder’s equity pledge and total factor productivity,which shows that when the enterprise’s equity concentration is high,the pledging shareholders are more motivated to take actions that are beneficial to themselves and harm the interests of the enterprise.The strengthening role of institutional investors shows that the investment idea that institutional investors pay more attention to short-term interests is consistent with the short-sighted behavior of pledge shareholders.It does not play the role of external supervision and governance,and even colludes with pledge shareholders to occupy the interests of enterprises and small and medium-sized shareholders;(3)It is also found that the controlling shareholder’s equity pledge affects the enterprise’s financing constraints and then affects the enterprise’s total factor productivity,that is,the controlling shareholder’s equity pledge intensifies the enterprise’s financing constraints and inhibits the enterprise’s total factor productivity.Finally,based on the above conclusions,this paper puts forward relevant policy suggestions from three aspects: improving the relevant system of equity pledge,internal governance and external supervision.