Study On Motivation Of Controlling Shareholder’s Equity Pledge Behavior Of Suzhou Yangtze New Materials Co.,Ltd.

In recent years,equity pledge,an efficient financing method,is increasingly favored by the capital market.On the one hand,for pledgers,the equity pledge is less affected by the supervision of the Securities Regulatory Commission and normally will not affect shareholders’ control rights,which opens up convenient and fast financing channels for listed companies.On the other hand,for the pledgee,equity is easy to circulate and easy to liquidate,which helps the financial institutions to control the risk with lower cost of disposal.Therefore,the equity pledge of controlling shareholders of listed companies in China has become more frequent and the proportion of pledges has become higher and higher.However,the behavior of equity pledge will lead to the separation of control rights and cash flow rights of the controlling shareholders,weakening the incentive effect,and strengthening the encroaching effect,which makes them have a stronger incentive to short the listed company and infringe upon the interests of the small and medium shareholders.In order to verify the real motivation behind the high-frequency and high-proportion equity pledge of controlling shareholders,whether it is for the financing support of listed companies or for short-selling methods of self-interest,this article takes Suzhou Yangtze New Materials Co.,Ltd.as a research case,and analyze its motivation from the market effect,financial effect and methods of tunneling these three aspects.The study found that,first of all,when Suzhou Yangtze New Materials Co.,Ltd.’s equity pledges targeting corporate demand,it will send positive signals to the market,thereby stimulating the stock price to rise and enhance the corporate value.Secondly,after the controlling shareholder of Yangzi New Materials Co.,Ltd.invested the equity pledge into the listed company,it solved the financing needs of the listed company and improved its financial status.In the end,after controlling shareholders had a high proportion of equity pledges,there was no obvious implementation of tunneling methods,such asreal earnings management and related transactions.In conclusion,the motivation of controlling shareholders of Suzhou Yangtze New Materials Co.,Ltd.to perform the high-proportion of high-frequency equity pledges is more likely to be due to the support of listed companies instead of short-selling listed companies.Although the case of this article finds that the motivation of the equity pledge of Suzhou Yangtze New Materials Co.,Ltd.is not short-selling,it is still possible to see the hidden risks and hidden dangers behind this behavior.In order to further regulate the equity pledge of the controlling shareholders of listed companies,the following policy recommendations are proposed: Firstly,improve relevant laws and regulations on equity pledges;secondly,improve the information disclosure system of equity pledges;thirdly,improve the internal corporate governance structure;and lastly,strengthen the external regulatory system.