Controlling Shareholder Equity Pledge, Corporate Social Responsibility And Financialization Of Real Enterprise

Listed companies in China are facing more prominent financing problems in the process of development.There are many constraints and restrictions on bank loans and other financing methods.Equity pledge,a new financing method with the advantages of simple procedures,low financing conditions and no dilution of control rights,is favored by controlling shareholders,and the scale of equity pledge has developed rapidly.At the same time,it also brings great risks to enterprises.When the stock price continues to fall,it will face the risk of forced liquidation of equity positions.Controlling shareholders usually increase short-term performance or manipulate information disclosure to send positive signals to the outside world through earnings management to avoid the risk of stock price crash and control transfer.Financial asset investment has a higher rate of return and a shorter return period,which can promote the improvement of corporate operating performance in the short term and thus maintain the stability of stock prices.Therefore,in order to avoid the risk after equity pledge,the controlling shareholders have strong motivation to intervene in the financial investment decisions of enterprises.In recent years,the rate of return on industrial investment has been declining,while the financial and real estate industries have been developing rapidly.In order to obtain high profits,a large number of real enterprises deviate from the main business and invest resources in financial activities with high rate of return,occupying the resources of fixed assets,enterprise innovation and other industrial investment,damaging the long-term development of enterprises,and eventually leading to the financialization of real enterprises.Corporate social responsibility based on stakeholder theory can improve the quality of corporate information disclosure and enhance the supervision of external stakeholders on the enterprise.There is still some room for research on whether it can effectively restrict the self-interested behavior of controlling shareholders and further affect the financial asset investment of enterprises.This study is of great significance for curbing the "de-real to virtual" of real enterprises and promoting the sustainable development of enterprises.Based on the sample of all A-share listed companies in China from 2010 to 2020,this thesis studies the impact and mechanism of controlling shareholders’ equity pledge behavior on corporate financialization,and analyzes the moderating role of corporate social responsibility in it.The results show that:(1)the equity pledge of controlling shareholders has a significant positive impact on the financialization of real enterprises;(2)Corporate social responsibility can significantly inhibit the positive impact of controlling shareholder’s equity pledge on the financialization of real enterprises.(3)Based on the grouping test of the nature of property rights,we find that in non-state-owned enterprises,the controlling shareholder’s equity pledge has a more significant positive impact on the financialization of real enterprises;(4)The controlling shareholder’s equity pledge can promote the financialization of real enterprises by increasing agency cost and aggravating financing constraints.According to the research conclusions of this thesis,the corresponding policy recommendations are put forward:(1)It is necessary to strengthen the supervision and management of equity pledge business to prevent the controlling shareholders’ tunneling behavior and strategic market value management behavior.The regulatory authorities should increase the review of equity pledge financing,and strengthen the restrictions on the proportion and rights of equity pledge of controlling shareholders.(2)Encourage enterprises to make industrial investment and give full play to the service ability of financial activities.Relevant departments should increase support for industrial investment,such as reducing the tax burden of enterprises through tax and fee reduction policies,and adding deductions for R&D expenses to encourage enterprise innovation.(3)Improve the corporate social responsibility supervision system and strengthen the performance of corporate social responsibility.The regulatory authorities should improve the corresponding laws and regulations,standardize the form and content of social responsibility reports,encourage enterprises to consciously disclose social responsibility information,and strengthen the supervision and review after information disclosure.