Research On The Motivation And Economic Consequences Of Equity Pledge Of Taihe Grou

Against the background of changes in the macroeconomic environment and the adjustment of the national fiscal policy,new financing methods have emerged in the capital market.After the opening of equity pledge business by brokerage firms in 2013,it has become a keen financing channel for listed companies given its characteristics of low capital threshold and high efficiency.It has alleviated the financing burden of controlling shareholders to a certain extent,but the risks arising from it have become increasingly prominent.The phenomenon of pledging the equity of major shareholders is more common in China,and the proportion of equity pledges is also high,and even the phenomenon of "no share pledge" and "full share pledge" has emerged.This paper will not only promote the rational understanding of equity pledges by both pledging parties of listed companies and the rational use of this new financing method,but also provide regulatory reference for the supervisory authorities,which is of great practical significance to the sustainable development of companies and the normal operation of the capital market.In view of this,this paper selects Taihe Group as the research object and analyzes the equity pledging behavior based on the annual reports of Taihe Group from 2014 to2021 and data obtained from relevant databases to explore its motives and economic consequences.Firstly,the research results at home and abroad are organized and summarized,and the equity pledging behavior of Taihe Group and its controlling shareholders are briefly described and the reasons are analyzed in depth;secondly,the impact of pledging on its stock price is analyzed through comparative analysis and event study method,and the impact on financial performance is analyzed in depth,and the risks arising from pledging behavior are analyzed;finally,a conclusion is made and corresponding recommendations.The paper finds that:(1)Equity pledges are motivated by the following factors: the need for financing,the convenience and low cost of financing,the maintenance of their control,and the appropriation of interests.(2)A high percentage of equity pledges can negatively affect the company’s financial performance and the value of the company to some extent,in addition it increases the risk of change of control and brings the risk of share price collapse,thus increasing the company’s business risk.Based on the results of the study,the following recommendations are made to the company: strengthen the internal management of the company,improve the internal control system of the company,the company should also plan the use of funds reasonably;small and medium shareholders should raise their awareness of rights and interests protection;for external regulators,they should strengthen supervision,improve the information disclosure mechanism and enhance information disclosure.We hope to provide some insight for the controlling shareholders’ equity pledge and reduce the negative impact of equity pledge,so as to provide some reference for improving the management level of listed companies in China.