Controlling Shareholder's Pledge Of Stock Rights?Tunneling And Company Value

With the development and expansion of the capital market,pledge of stock rights has become a hot way of financing.But it has also been criticized,especially for the controlling shareholder's pledge of stock rights,which leads to the loss of the interests of the minority shareholders.In the case study,this paper studies the motivation and economic consequences of pledge of stock rights,which has theoretical and practical significance.Theoretical part.Based on the existing literature,this paper uses second kinds of agent theory and control benefit theory,constructed a theoretical analysis framework for pledge of stock rights,tunneling and company value of controlling shareholders,mainly studied the following issues:The first is the motive of controlling shareholders' pledge of stock rights;Second,how do controlling shareholders use pledge of stock rights to holding shareholder support and tunneling;Third,the way pledge of stock rightss affect the company's value.Case section.This article selects NEEQ'S Guangxi Mingli Innovation Industrial Co.,Ltd.as a case study.Firstly,Mingli shares raised a lot of funds after two private placements,then introduced a large number of market makers in order to improve liquidity,make good news to improve the share price.Secondly,after obtaining a large amount of funds and improving liquidity,Mingli Group began to quietly carry out pledge of stock rightss and tunnelings.Through capital operations,the interests were transferred to the controlling shareholders.Thirdly,this paper analyzes the operating environment and financial indicators of Mingli shares,uses Tobin's Q to measure the changes in the company's value and compares with company which in the same industry,and proves that the company's operating environment and financial status are deteriorating after the pledge of stock rights,and the company's value is damaged.the interests of small and medium shareholders are impaired,and banks cannot recover pledged funds.Finally,by summing up the case analysis,suggestions for improving the internal and external supervision of company.The result of the case study shows that there is a correlation between the controlling shareholder's malicious pledge of stock rights and the company's value.Malicious pledge of stock rights is a special tunneling behavior and will result in the separation of the two right,which can reduce the cost of tunneling;After the pledge of stock rights,the controlling shareholder's tunneling in the listed company's interests is further aggravated;pledge of stock rights will reduce the value of the company,when a controlling shareholder commits a malicious pledge of stock rights,the higher the proportion of pledged equity,the more serious the decline in company value,impaired interests of small and medium shareholders.