Protection Of Small And Medium Shareholders' Interests Under The Pledge Of Large Shareholders

Equity pledge is also called Stock pledge,which is a pledge established by the pledgor to use the equity owned by themselves as the pledge object.Compared with other financing methods,financing through equity pledge can not only make the original control right of the shareholders unaffected while obtaining funds,but also does not need to go through complicated approval.Therefore,equity pledge as a financing method is getting more and more popular with shareholders.The controlling shareholder financing by pledge their own equity has become more and more common in the market.The investment direction of financing funds is an important part of the allocation of entrerprise resources.The direction of capital will affect the enterprise value,and also affect the minority shareholders' rights and their interests.Compared with small and medium-sized shareholders,the controlling shareholder of the company has more shares and enjoys more decision rights for corporate affairs.There was lack of legal mechanisms for the protection of small shareholders in China,and the law that restricts the behavior of larger shareholders is also missing.Therefore,the use of control by the majority shareholder for the benefit transfer,and the case of infringement of the interests of small and medium shareholders is not uncommon.The existing papers' research shows that the shareholder pledge of the majority shareholder is mostly due to infringe the interests of listed companies and small and medium shareholders.Based on the previous scholars' research,this paper analyzes the changes of the company's performance before and after the equity pledge by the larger shareholders of Geo-Jade Petroleum Corporation from 2014 to 2017,and analyzes the event window using the event research method.The long-term gains and accumulated long-term gains of the period,explored the motives of large shareholders' equity pledge,the influence of large shareholders' equity pledge on small and medium shareholders,and the impact on the company's value,the mechanism of influence on the interests of small and medium shareholders,and finally puts forward relevant suggestions about the protection of small and medium-sized shareholders under larger shareholder's pledge,and to better constrain the behavior of major shareholders.It may can protect the interests of minority shareholders,and promote the company's better development.The research in this paper believes that when large shareholders are faced with financial constraints,the equity pledge is carried out for the purpose of supplementing the capital that demanded by larger shareholders.The equty pledge of the major shareholders cannot create value for the minority shareholders and damages the value of the company.The market has a negative reaction when the major shareholders pledges their shares.The equity pledge of major shareholders may cause the stock's price of listed companies to fall.The listed companies and regulatory agencies should jointly participate in the construction,reducing the risk of equity pledge of the major shareholders of listed companies,to protect the interests of minority shareholders,and promote the value of public company.