The Influence Of Controlling Shareholders’ Equity Pledge On Enterprise Share Repurchase Behavior

With the development of China’s capital market,more controlling shareholders of listed companies obtain financing by equity pledge.However,if the controlling shareholders fail to supplement the pledge in time when the stock price drops sharply after the pledge,they will face the risk of liquidation and the risk of transfer of control right.If the controlling shareholder of a listed company fails to timely alleviate the risk of control transfer brought about by the pledge,it will not only damage the value of the company,but also bring certain financial risks to the capital market.Especially after the second half of2017,the stock price of A-share market has been falling all the way,and the equity pledge of listed companies frequently burst.In this case,the equity pledge behavior has attracted the attention of China’s regulatory authorities.For the purpose of safeguarding their own interests and control,the controlling shareholders of listed companies usually carry out market value management to maintain control.In 2018,China revised the new stock repurchase management method and simplified the approval process of stock repurchase,which made stock repurchase increasingly favored by listed companies.Therefore,this paper mainly discusses the market value management method of stock repurchase.Based on the above analysis,this paper selects the listed companies in China’s A-share market in 2014-2021 as the research objects to empirically study the relationship between controlling shareholders’ equity pledge and share repurchase,as well as the risk of stock price crash and management shareholding ratio in this relationship.The study shows that:(1)the controlling shareholders’ equity pledge has a positive impact on the share repurchase behavior;this relationship is more significant in non-state holdings,companies in financial difficulties and low shareholding by institutional investors.(2)The equity pledge behavior of the controlling shareholder of the listed company will lead to the risk of stock price collapse of the enterprise,and the risk of stock price collapse has an intermediary effect in the relationship between the equity pledge and stock repurchase of the controlling shareholder.(3)The management shareholding ratio has a regulatory role in the relationship between the controlling shareholder’s equity pledge and stock repurchase.After conducting the relevant robustness test,the above conclusion is still true.The research results of this paper enrich the literature system of equity pledge,and also give a reference to the investment behavior of small and medium investors.