Research On The Impact Of Controlling Shareholders’ Equity Pledge On The Financing Decision Of Listed Companies

Recently,equity pledge has be a vital financing mode for controlling shareholders due to its advantages of efficient financing,convenience and no impact on control.By the end of 2021,the controlling shareholders of 1,274 listed companies had carried out equity pledge transactions,and the pledge ratio was generally high.However,equity pledge is a "double-edged sword",which on the one hand provides financing convenience to the controlling shareholders,but on the other hand,it also brings greater risks to the controlling shareholders,listed companies and even investors.The closing line in the equity pledge contract makes the pledged shares forcibly sold when the stock price falls sharply,resulting in the risk of losing control of the company by the controlling shareholder,and causing a chain reaction to other participants in the capital market,which is not uncommon in the capital market.Therefore,it is particularly important to seeker the effect of the pledge of controlling shareholders on the firm and its decision-making.As an important part of a company’s financial decision,the financing decision affects the realization of the company’s value maximization.Will the equity pledge of controlling shareholders influence the financing decisions? At the same time,the information disclosed by listed companies is an important basis for investors to make investment decisions on listed companies,which will have an important impact on the financing of listed companies,so will the quality of information disclosure affect the ties between the equity pledge of controlling shareholders and financing decisions?Based on the research of predecessors,taking message asymmetry,signal delivery and control theory as the basic theories,combined with the data of Shanghai and Shenzhen A-share listed companies from 2014 to 2021,this paper empirically analyzes the effect of equity pledge on the company’s financing structure and debt term structure,as well as the regulating effect of information disclosure quality,and discusses the heterogeneity of the sample into state-owned enterprises and non-state-owned enterprises,manufacturing enterprises and non-manufacturing enterprises sub-samples according to the nature of property rights and industry types.At the end of the article,it also discusses whether the equity pledge of the controlling shareholder will make the company over-indebted,and the path of equity pledge affecting the financing structure.The results show that the higher the pledge ratio,the more companies will prefer debt financing,particularly long-term debt,and there is a role path of "controlling shareholders’ equity pledge-financing constraint-financing structure",but with the improvement of information disclosure quality,the promotion effect of pledge ratio on corporate debt financing preference will be weakened.Further examination according to the nature of property rights and the classification of industry types,it is found that equity pledge on the financing structure and debt term structure of the company and the regulating effect of information disclosure quality only exists in non-state-owned enterprises,and the effect is not significant in state-owned enterprises.At the same time,compared with non-manufacturing enterprises,the equity pledge of controlling shareholders in manufacturing enterprises has a greater impact on the company’s financing structure and debt term structure,while the moderating effect of industry type on the quality of information disclosure is not heterogeneous.In addition,the higher the pledge ratio,the more serious the company’s over-indebtedness.Based on the above research conclusions and the actual situation of listed companies,this paper puts forward four reference suggestions for listed companies and their controlling shareholders: first,reduce the pledge ratio and optimize the financing structure;The second is to extend the term of debt and avoid pledge risks;The third is to improve the quality of information disclosure and ease financing constraints;The fourth is to innovate financing methods and broaden financing channels.The research results in this paper can provide useful suggestions for enterprises to make scientific and reasonable financing decisions and resolve pledge risks,and can also enrich and supplement related research fields.