Research On The Motivation And Consequences Of The Equity Pledge Of The Major Shareholders Of Yan’an Bikang

In May 2013,the country Securities Regulatory Commission passed the trial measures on the equity pledged repurchase business.Since then,my country’s listed companies have begun to pledge equity to solve financing problems.Equity pledge financing begins to develop in our country.At the same time,the number of companies with operating problems due to frequent equity pledges has also increased.After the major shareholder of the listed company pledges the stocks in his hands to financial institutions such as securities companies,if the major shareholder does not have sufficient funds to supplement the pledge,or provide other collateral to banks and securities companies,he will face forced liquidation.If the liquidation share is large,it will cause the risk of equity pledge,which will result in the risk of transfer of control of the major shareholder.Then,the major shareholder of the company is likely to lose a corresponding proportion of the company’s equity,affecting the stability of the company’s equity structure.Therefore,the equity pledge behavior of major shareholders is closely related to the company’s daily management.For the reason that,this paper summarizes the motivation of the major shareholder’s equity pledge,as well as the consequences of this pledge on the company,which is benefit to the smooth operation and stable development of the company.This paper selects Yan’an Bikang as the research object,firstly,this paper introduces the equity pledge’s background,significance,content and theoretical basis,secondly,the relevant literature on equity pledge has been reviewed;Based on a brief description of the major shareholder’s equity pledge behavior,combined with the company’s actual situation,conduct this research on the motivation and consequences of major shareholders’ equity pledge.The study found that Yan’an Bikang’s major shareholders frequently pledged a high proportion of equity for the reasons of equity pledge policy support,maintaining their own control,using the control position to obtain excess returns,and transferring their own financing risks,resulting in the company’s share price to fluctuate and the company’s financial situation.Performance decline and the adverse consequences of inducing major shareholders to disclose information in violation of regulations.Finally,based on the above analysis,this paper puts forward suggestions and measures to reduce the proportion of major shareholders’ equity pledge,increase financing channels,improve corporate governance structure and supervise the company’s standard information disclosure from the perspective of company stock price,financial performance and information disclosure,so as to help Yan’an Bikang’s major shareholders maintain a reasonable equity pledge ratio,optimize the company’s equity structure,and supervise the legal and compliant information disclosure of listed companies.