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

In recent years,China’s real economy has grown slowly.On the contrary,the financial industry has shown a trend of rapid development,and the problem of "shifting from reality to emptiness" in the real economy continues to ferment,attracting high attention from the academic community and regulators.Most of the existing literature studies the influencing factors of corporate financialization from the perspective of macroeconomic policies and micro-enterprise governance characteristics,while less attention is paid to the conduct of controlling shareholders.Under the equity pledge scenario,they have both the right and willingness to influence the company’s financial investment decisions due to their interests and risks.On this basis,we use the data of the A-share public companies of China’s Shanghai and Shenzhen Stock Exchanges from 2011 to 2020 as research target in the dissertation,as well as analyze how the controlling shareholder’s equity pledge acts on the company’s financialization and its internal mechanism.The study found that:(1)A U-curve relation exists between the controlling shareholder’s equity pledge and corporate financialization.An increase in equity pledge ratio will reduce the degree of enterprise financialization at the beginning of the period,but after the proportion of equity pledge reaches a certain threshold,continuing to increase equity pledge ratio will significantly improve the degree of enterprise financialization.(2)The study on the impact mechanism indicates that financing constraints have a partial mediating function in the path of controlling shareholders’ equity pledge affecting corporate financialization.(3)The regulatory effect indicates that the development of digital finance has reinforced the U-shape relation between the two and raised the overall level of enterprise financialization;However,analysts’ attention has weakened the U-shape relation between the two and lowered the overall level of enterprise financialization.(4)The expansion analysis indicates that the U-shaped nonlinear influence of equity pledge of controlling shareholders on corporate financialization is only significant in non-state companies,companies with high risk of control transfer as well as high shareholding ratio of senior executives.After endogenous test and other robustness tests,the above research conclusions remain valid.The possible contribution of this dissertation: First,it comprehensively discusses the U-shape nonlinear effect of controlling shareholder’s equity pledge on corporate financialization,enriching the study on the inducements of corporate financialization and the economic effect of equity pledge.Second,it is indicated that financing constraints play an intermediary role which complement the transmission path of controlling shareholders’ equity pledge act on enterprise financialization.Third,in view of the current booming environment of Chinese digital finance,digital finance is included in the analysis framework of the relationship between the two,providing a theoretical basis for guiding digital finance to benefit from the benefits and prevent disadvantages in the future development and better serve the real economy.Fourth,the analyst’s attention is also included in the analysis framework of the relationship between the two,providing policy recommendations for guiding the analyst industry to give full play to the role of “information revelation” and “external scrutiny”.