The Influence Of Controlling Shareholder Pledge On Company Value

Due to the imperfection of the capital market,the relative concentration of equity in listed companies in China is a common phenomenon.Therefore,the second type of agency problems between large shareholders and small and medium shareholders are more and more concerned by scholars.This problem can be attributed to a high degree of separation between control and cash flow rights.The separation of the two powers has caused the major shareholder to have a motive for encroachment on the listed company.The phenomenon of infringement of the interests of small and medium shareholders,such as related party transactions and illegal use of funds,originated from this.Equity pledge is now more and more widely used in the financing of listed companies.First,because the liquidity of equity is strong,it is easy to liquidate and is widely accepted by financial institutions.Second,after the majority shareholder pledges the equity,it will not Losing control of the company can still participate in the company's production and operation decisions.Therefore,scholars have begun to pay attention to this kind of financing method.This paper also hopes to further explore the influence of controlling shareholders' equity pledge on the value of listed companies through the case analysis of Zongge Holdings,and provide some suggestions for investors and regulators.This paper first sorts out the relevant domestic literature and finds that most of them believe that the equity pledge has intensified the separation of control rights and cash flow rights,which led to the second type of agency problem,which caused the majority shareholder to generate encroachment motives and damage the company's Value;some scholars believe that after the controlling shareholder pledges the equity,in order to prevent the loss of control by being forced to liquidate,it will strive to maintain the company's performance.Then it expounds the core theory of this paper,namely the agency theory,combined with the situation in China,specifically expounds the second type of agency theory,and also introduces the related concepts of equity pledge and separation of two rights.Then introduces the collection of Zongge Holding,analyzes a series of agency problems arising from the intensification of the separation of the two rights after the equity pledge;and uses the EVA and Tobin Q value for the Tibetan Holding Group from December 2016 to 2018 6 The value of the month was evaluated,and the short-term effects of equity pledge were analyzed using the event research method.Through analysis,it is concluded that the equity pledge behavior of Zongge Holdings has led to the intensification of the separation of cash flow rights and control rights,which has led to the second type of agency problems,such as non-fair related transactions and capital occupation.From the perspective of the company's long-term value,the equity pledge will damage the company's value;at the same time,the company's stock return rate will generally be lower than the market's normal rate of return before and after the equity pledge is released.Finally,through the case analysis,suggestions should be made.Due to the particularity of China's capital market,the construction of information disclosure system should be improved.The supervision layer should also strengthen the supervision of the equity pledge of listed companies.At the same time,the majority of investors and the controlling shareholders of listed companies should pledge their shares.The risks are adequately understood.