Does The Controlling Shareholder Equity Pledge Lead To The Managerial Private Interests?

Managerial private interests behavior is an opportunistic behavior that managers take to satisfy their own interests.The inconsistency of shareholders' and managers,interest objectives is the fundamental reason.Managers' behavior can be affected by shareholders' behavior in all aspects,among which shareholders' loss of supervisory role due to embezzlement of company resources or collusion with managers to realize interest transmission lead to more serious problem.Therefore,it is of great theoretical and practical significance to reveal the influence mechanism of shareholders' behavior on managers' behavior,which helps effectively reduce agency cost of managers,strengthen the market constraints and contract norms of managers,and realize the sustainable development of companies.In our country,the ownership structure of the company is relatively concentrated.Under this background,the behavior of the controlling shareholders has a particularly important position and influence on the decision-making and governance efficiency of the company.With regard to the behavior of controlling shareholders,one of the heated issues that has attracted extensive attention in recent years is equity pledge.Equity pledge,especially from the controlling shareholders of listed companies,has a vital impact on the healthy operation of the capital market and the operation of the company.The continuous exposure of equity pledge increases the risk of control rights transfer and forced liquidation.Controlling shareholders have greater motivation to manipulate the earnings level of the company and expropriate the interests of the company and minority shareholders through the transmission of interests.The existing academic literatures pay attention to the influence of equity pledge on corporate governance and the second type of the agency problem.However,no literature has paid attention to the role and influence mechanisru of managers,private interest behavior when the controlling shareholders' equity pledge damages the corporate performance,expropriate resources from company as well as the interests of minority and medium-sized shareholders.In view of this,this paper studies the influence of the controlling shareholders'equity pledge on the managerial agency problem as well as the relationship between the equity pledge and managerial private interests by taking A-share listed companies in Shanghai and Shenzhen stock exchange as a sample from 2009 to 2018.In this paper,it is found that the equity pledge by the controlling shareholders increases the managerial private interests,and this effect only exists in the non-state-owned enterprises with less institutional arrangement and higher proportion of the equity pledged.Further analysis shows that the managerial private interests increase the negative effect of the equity pledge on corporate performance.This study reveals the impact of controlling shareholders' equity pledge on managerial private interests behavior and its mechanism,expands the research horizon of equity pledge and managerial private interests,and enriches the relevant research literature.In practice,the conclusions of this-study have guiding significance for policy formulation and implementation in strengthening the supervision and regulation of equity pledge,enhancing the governance of controlling shareholders,expropriation on the interests of companies and small and medium shareholders,improving managers' ability to participate in governance and facilitating the construction of professional manager market.