The Impact Of Controlling Shareholders’ Equity Pledge On The Performance Of Listed Companies

Being a new financing tool,equity pledge has effectively revitalized the equity resources in China’s capital market and broadened financing channels for listed enterprises,especially for small and medium-sized listed enterprises in the growth stage,the low threshold,speed and low cost of equity pledging have made it a popular choice for many small and medium-sized listed companies.However,the risks behind equity pledges cannot be ignored.In recent years,a number of companies that have raised funds through equity pledges have experienced forced liquidation,which has had a significant negative impact on their corporate development and performance improvement.Although the relationship between controlling shareholders’ equity pledges and corporate performance has been studied by scholars,most of them take a single company or all A-shares as the research object,while few scholars have explored the influence path and influence factors between the two in depth.Based on this,in order to further study how controlling shareholders’ equity pledges affect firm performance,this paper,based on theoretical analysis,selects GEM firms from 2014 to 2021 as sample data for empirical research,and introduces capital appropriation,information asymmetry,and corporate risk-taking as mediating variables,and management shareholding and financial environment as moderating variables to analyze and explore the specific paths between the two In addition,this paper also investigates the internal and external moderators that may affect the relationship between the two.In addition,heterogeneity analysis is also conducted according to the size and growth of firms.Through theoretical and empirical analyses,this paper concludes that:(1)pledging of controlling shareholders’ equity is negatively related to corporate performance;(2)pledging of controlling shareholders’ equity negatively affects corporate performance by increasing controlling shareholders’ capital appropriation,increasing information asymmetry and increasing corporate risk-taking,respectively,and capital appropriation,information asymmetry and corporate risk-taking play intermediary roles between them;(3)the relationship between controlling shareholders’ equity and corporate performance is negatively affected by internal and external factors.(3)Through the analysis of internal and external influencing factors,it is found that the implementation of management shareholding and the improvement of financial environment can effectively weaken the negative effect of controlling shareholders’ equity pledges on firm performance;(4)After heterogeneous grouping of firm size and growth,it is found that the performance of small and medium-sized and high-growth firms is more negatively affected by controlling shareholders’ equity pledges.Finally,by summarizing the research results,this paper puts forward relevant suggestions at both government and enterprise levels for improving relevant institutions and regulations,increasing financial reform efforts,and optimizing internal corporate governance.