Research On The Equity Pledge Of Huazegunie's Controlling Shareholder And Its Impact On The Value Of Company

In recent years,owing to low threshold,simple procedures,less limited restrictions and easy to trade and value,the equity pledge has become the most popular financing method for the majority of listed company shareholders,especially controlling shareholders.During the period of equity pledge,the ownership of the stock still belongs to controlling shareholders.After controlling shareholders pledge the equity,pledgers can not only obtain the funds,but also maintain the control of the listed company.Therefore,the scale of the equity pledge of controlling shareholders in the A-share market is increasing rapidly.This paper combines the specific case of ST Huaze(Huazawa Cobalt Nickel),which is called the poorest listed company,to study the impact of controlling shareholder's pledge behavior on company value.First of all,relevant literatures at home and abroad have been sorted out.Based on the second type of principal-agent problem,most scholars believe that the purpose and final result of the controlling shareholder's equity pledge is to short selling the listed company and damage the value of the listed company;However,some scholars believe that the purpose and final result of the controlling shareholder's equity pledge is to support the development of listed companies or to strengthen control of listed companies,and therefore provides a strong incentive to improve the performance of listed companies,thereby enhancing company value.And based on principal-agent theory,information asymmetry theory and control rights theory.this paper believes that controlling shareholders' frequent and high proportion of equity pledge will lead to the separation of their control rights and cash flow rights,which will easily lead to maj or conflicts of interest between controlling shareholders and minority shareholders,resulting in a second type of agency problem.Under this circumstance,the controlling shareholder's short-selling cost to the listed company is small,there are sufficient motives and opportunities for them to use the control of the company to influence the major decisions of the listed company.Meanwhile,the controlling shareholder can short-list the listed company through related party transactions and non-compliance guarantees for personal benefits.Next,this paper introduces the process of equity pledge of Huaze controlling shareholders,and analyzes the abnormal phenomena so as to judge the real motive of equity pledge;Using the event research method,analyze the short-term market reaction of the listed company before and after the announcement of the controlling shareholder pledge behavior,and then analyze the short-term impact of the behavior on company value;Using the EVA model to evaluate the company value,and analyze the long-term impact of the equity pledge on company value;By exploring the segregation rate and the short-selling cost of the controlling shareholder's control and cash flow rights before and after the equity pledge,the paper analyzes the mechanism of the controlling shareholder's equity pledge affecting the value of the listed company;This paper introduces the illegal capital occupation and illegal guarantees of the controlling shareholder during the period of equity pledge,and analyzes the means of damage to the value.On the basis of the above analysis,the paper concludes that for Huaze,controlling shareholders' frequent and high proportion of equity pledge has sent unfavorable signals to the market.In the short-term after the announcement,the company's daily stock returns and the stock price will fall,which will damage the company s value;In the long run,it leads to the second type of agency problem and greatly reduces the short selling cost of the controlling shareholder to the listed company,it will has a negative impact on the value of the listed company.Finally,this paper proposes relevant recommendations based on the research results:The listed company should strengthen its internal governance and give full play to the supervisory role of the board of supervisors and independent directors;The disclosure of information on the equity pledge of controlling shareholders by the listed company should be more detailed,such as the disclosure of specific capital investment;Relevant regulatory agencies should increase supervision over the pledge of equity and penalties for violations;Investors and major shareholders should learn to judge the true motives of equity pledge and prevent risks arising from equity pledges.