Research On The Motivation And Effect Of Suning Major Shareholder’s Equity Pledge

In essence,equity pledge is both a right pledge and a financing method.In order to guarantee the timely repayment of their debts,the shareholders of an enterprise agree with the creditors to deliver their equity to the creditors in the form of vouchers.More and more companies will choose equity pledge as a financing means,which is mainly due to the protection of the pledge’s rights in this way,the separation of control right from cash flow right,and the strong liquidity and high liquidity of equity pledge,which is not affected by the restriction period of stock transfer and other regulations,and greater freedom.Equity pledge will also bring risks to the stock market,minority shareholders related to the pledging party and the performance of the pledged equity company.It will also cause serious agency problems and lead to a decline in the value of the company.However,some scholars have also found the positive impact brought by equity pledge.After equity pledge of controlling shareholders,controlling shareholders and relevant stakeholders often take actions to reduce the hidden danger of stock price collapse in order to avoid additional guarantees and transfer of control rights,which can also convey the positive information that shareholders have confidence in the potential value of the company.In this paper,Suning Tesco,which has been in shortage of funds and blocked in financing since 2019,is selected as the research object.The motivation of pledge,related effects caused by equity pledge and existing problems are deeply analyzed,and possible solutions are proposed in the end.Combined with the enterprise’s financial situation,the use of funds and debt situation to judge Suning Tesco’s financing demand motivation.Using the separation coefficient of two rights and the proportion of guarantee amount to net assets and other indicators to judge the major shareholders of the company may have the negative motive of "hollowing out" the enterprise.In terms of effect,this paper analyzes three aspects: short-term market response,corporate value change,and the impact of financing constraints.In the short-term market reaction,this paper adopts the event study method to conduct a comparative study on the equity pledge under ordinary circumstances,the equity pledge influenced by public opinion,and the equity pledge for the purpose of guaranteeing related parties,so as to summarize the influencing factors on the market reaction to equity pledge.It is found that when the company is affected by negative public opinion or the pledge purpose is to increase the credit of related parties,It has a negative impact on short-term market reaction.This paper discusses the negative impact of equity pledge on enterprise value by aggravating agency problem with the separation of two rights,failing to improve solvency and aggressive and inefficient investment strategy,and verifies it by using Tobin’s Q method and EVA method.In order to reflect the realization degree of equity pledge on the motivation of corporate financing demand,this paper takes financing constraint as the standard and measures the effect of equity pledge on financing constraint by means of dividend payment rate,interest cover multiple and kz index.At the end of this paper,the author will summarize the above research and conclude the risk of control transfer and bankruptcy faced by Suning Tesco due to equity pledge,and give several prevention suggestions for the causes of risks,including setting the highest cumulative pledge ratio,limiting the participation degree of controlling shareholders with a high proportion of pledge in corporate investment decisions,and optimizing the information disclosure system of equity pledge.