An Empirical Study On The Impact Of Controlling Shareholders’ Equity Pledge On Earnings Management

Due to the low cost,fast speed and simple financing procedures of equity pledge,listed companies are more willing to obtain funds by pledging equity.Although equity pledge meets the needs of pledgor and pledgee to a large extent,the risks hidden behind it should not be underestimated.Since the second quarter of 2018,the A-share market has continued to decline,and many listed companies have experienced the risk of liquidation.Once the stock price falls to the parity line,the pledged shares are disposed of.In order to avoid this situation,the controlling shareholders will have strong earnings management motivation.At the same time,ownership structure plays a core role in corporate governance.And different ownership structures will have different impacts on the controlling shareholders’ equity pledge behavior and earnings management degree.So this thesis studies China’s A-share listed companies from 2016 to 2020 and combs the literature at home and abroad.This thesis is based on principal-agent theory,signal transmission theory,information asymmetry theory and stakeholder theory to explore the controlling shareholder equity pledge impact on earnings management and ownership structure in the controlling shareholder equity pledge and earnings management regulation in the system.In this thesis,excel and stata software are used to simplify the data.And the stata software is used for empirical test.Finally,this thesis draws the following conclusions: Firstly,the controlling shareholder’s equity pledge rate negatively affects the degree of accrued earnings management in the company.On the contrary,the controlling shareholder’s equity pledge rate has a positive impact on the degree of real earnings management in the company.Secondly,ownership concentration can strengthen the positive correlation between pledge rate of controlling shareholders’ equity and real earnings management.And ownership concentration can also promote the positive impact of controlling shareholders’ equity pledge rate on the degree of real earnings management.Thirdly,contrary to the effect of equity concentration,equity check and balance can inhibit the negative impact of controlling shareholders’ equity pledge rate on the degree of accrued earnings management.And the degree of equity check and balance can also inhibit the positive impact of the controlling shareholder’s equity pledge rate on the degree of real earnings management.At the same time,according to the research conclusions,this thesis also puts forward some research suggestions.I hope the relevant suggestions of this thesis can contribute some weak strength to the improvement of the quality of corporate earnings and the stable development of capital market.