Research On The Influence Of Stock Pledge Of D Company’s Controlling Shareholders On Company Value

With the increase of the number of listed companies,the demand for funds is also increasing.In order to obtain funds to maintain sustainable development,listed companies need to take appropriate financing methods.In recent years,the equity pledge has become an important financing method in the capital market with its advantages of convenience,high liquidity and low cost.However,with the occurrence of the phenomenon of some equity pledge enterprises’ positions bursting,the financing method gradually shows some risks.Frequent and high proportion of equity pledge behavior will send negative information to the market,such as the shortage of funds and the deterioration of financial situation,agency problems caused by the separation of ownership and control,and controlling shareholders may take the opportunity to encroach on the interests of the company,which will ultimately affect the value of listed companies.Frequent and high proportion of equity pledge phenomenon has long existed in D company,which is known as "the first share of Chinese garden".Taking the company as the research object,this paper analyzes how the pledge behavior of its controlling shareholders affects the value of the company.Firstly,the background of equity pledge is introduced,and the relevant theories and the research literature of scholars at home and abroad are reviewed.Then,the situation of company D and equity pledge are introduced,and the short-term market reaction of controlling shareholders before and after equity pledge is analyzed,then based on the Tobin’s Q theory,the long-term impact of this behavior on company value is discussed from both vertical and horizontal angles,and the way that the pledge of the controlling shareholder’s equity affects the company value is analyzed and explained.Finally,some suggestions are put forward according to the analysis.By studying the impact of the pledge behavior of the controlling shareholders of D company on the value of the company,the conclusion can be drawn that even if the pledge proportion of the controlling shareholders does not reach 50% of the total share capital of the company,the frequent pledge behavior will still lead to the fluctuation of stock price,cause financial risk,increase the degree of separation between cash flow rights and control rights and provide opportunities for the controlling shareholders to empty the listed company,which will have an adverse impact on the value of the company.Therefore,when the proportion of the shares pledged by the controlling shareholders is too large,the listed companies should be vigilant in time and take effective measures to prevent the controlling shareholders from encroaching on the interests of the company and other small and medium shareholders,so as to maintain the stable development of the company.It also hopes to play a reference role for other listed companies with similar characteristics.