An Analysis Of The Impact Of Controlling Shareholder’s Equity Pledge On Corporate Performance In A-share Listed Companies In Shanghai And Shenzhen

Equity pledge is a way for shareholders of listed companies to raise funds by taking their equity as collateral to obtain funds from securities brokers and banks.When equity pledge provides financing convenience for companies,it also has corresponding operational risks.When the stock price falls to the balance line of stock pledge,the power to deal with the pledged stock will be handed over to the pledge-holders such as banks and securities brokers,and the shareholders will lose the control of the company.Therefore,while equity pledge brings benefits to the company,there are certain risks.Is equity pledge the icing on the cake or counterproductive for the company? Through the research,this paper enriches the relevant theoretical research in the field of equity pledge,and brings long-term solutions for the healthy development of equity pledge market and enterprises.Based on the annual data of A-share listed companies in Shanghai and Shenzhen Stock exchanges from 2016 to 2021,this paper uses the double fixed effect model to study the relationship between equity pledge degree and corporate performance.The results show that there is A negative correlation between the equity pledge rate of controlling shareholders and corporate performance.This shows that the shareholders of equity pledge companies are more likely to expropriate their interests,and the announcement of equity pledge will bring negative expectations to investors and increase the risk of stock decline.According to the different types of moderating variables,the interaction terms between equity concentration,equity balance and EPU(economic policy uncertainty)and equity pledge rate are added into the model for discussion.The results show that: first,equity balance has a negative moderating effect on the impact of equity pledge rate and corporate performance;The results show that: first,equity balance has a negative moderating effect on the impact of equity pledge rate and corporate performance;second,economic policy uncertainty and equity concentration have a positive moderating effect.In other words,the improvement of equity balance is conducive to curbing the negative impact of controlling shareholders’ equity pledge on corporate performance,and the increase of ownership concentration and economic policy uncertainty will magnify this negative effect.For the three categorical variables,the nature of ownership,the quality of the company and the strength of supervision,the regression method is used to explore their correlation with the equity pledge.The results show that the impact of equity pledge on corporate performance is more significant in state-owned holding companies,high quality companies and companies facing stricter supervision.This is because state-owned companies are financially underfunded by the government,so they have less enthusiasm to improve their performance after pledge,resulting in a decline in performance.The equity pledge of high-quality companies conveys a signal that the company’s capital chain is tight to the market,and the regions with strict supervision will attract more media attention at the same time,which will magnify the effect of this negative signal and further lead to the decline of corporate performance.The innovation points of this paper are mainly reflected in the following aspects: first,expanding the analysis variables.The second is to expand the analysis Angle.Finally,this paper puts forward some countermeasures and suggestions on the above research conclusions: first,strengthen the disclosure degree of equity pledge information,and improve the establishment of equity pledge system by the government;The second is to strengthen the robustness of equity pledge subjects and establish a good equity balance mechanism;Third,to reduce the impact of economic policy uncertainty,enterprises should strengthen the risk rating mechanism;Fourth,strengthen the financing capacity of private enterprises,the government should expand the financing channels of private enterprises;The fifth is to pay attention to the cultivation of investors,investors should establish long-term investment consciousness.