Research About The Influence Of Controlling Shareholder’s Equity Pledge On Enterprise Financialization

The global economic slump,the increasingly tight regulation and risk protection in the domestic financial system,and the numerous limits on domestic corporate financing have increased the appeal of equity pledges among enterprises due to their numerous benefits.In light of the trend of "integration of industry and finance" and the policy of "de-funding," the influence of money received by controlling owners through equity pledges on the financialization of firms has piqued the interest of researchers.From the current scenario,the share pledge rules,regulations,and management system are gradually improved,and the share pledge ratio and money flow are controlled and regulated.Equity pledge reached a tiny high in 2017 and 2018,when there was essentially no stock pressure.For the last two years,both the proportion of pledged equity and the proportion of pledged business have declined,and the equity pledge of controlling shareholders has followed suit.The funds received by the controlling shareholder’s equity pledge come to the pledgee(i.e.the controlling shareholder),and more than half of them are utilized for financing guarantee or loan guarantee by the controlling shareholder,thus alleviating financing limitations and gaining cash flow is a key aim of the controlling shareholder’s equity pledge.The total rate of development in net profit of Chinese enterprises is declining.The size of enterprises’ fixed assets continues to grow,as does industrial investment,although the rate of expansion is clearly slowing.The overall financial assets of firms expanded year after year,as did the return on investment of enterprises’ financial assets.This article empirically investigates the influence of controlling shareholders’ equity commitments on company financialization using a sample of Shanghai and Shenzhen A-share listed companies in non-financial and real estate industries from2012 to 2021,and comes to the following conclusions:(1)Controlling shareholders’ equity promises have a detrimental influence on firm financialization.(2)The negative effect of controlling shareholder equity pledge on corporate financialization is more pronounced among non-SOEs and growth stage firms;(3)the KZ index of financing constraints is a moderator of the negative effect of controlling shareholder equity pledge on corporate financialization,accounting for 30.20% of the total effect.(4)The level of corporate risk-taking as a moderating variable weakens the negative relationship between controlling shareholders’ equity pledges and corporate financialization,inhibits the tendency of listed companies to reduce financial asset allocation after controlling shareholders’ equity pledges,and slows the degree of decline in the proportion of corporate financial assets held.This study adds to the body of knowledge on company financialization and equity commitments and creatively includes two variables,the KZ Index measures financial restrictions and the degree of corporate risk-taking,which are of practical significance to the government and regulators,enterprises and investors.