Research On The Effect Of Controlling Shareholder's Share Pledge On Goodwill Impairment

Due to the characteristics of simple approval procedure,low cost and fast financing,the share pledge is gradually favored by the controlling shareholders of many listed companies,and has become an important financing method in recent years.Share pledge financing provides convenience for shareholders,but also brings hidden trouble for controlling shareholders' transfer of rights.In order to solve the risk of stock equity losing caused by stock price fall,controlling shareholders usually manipulate company statements with their controlling position on listed companies.In recent years,under the impetus of the merger and acquisition boom,the goodwill generated by high-premium mergers and acquisitions has grown by spurt.As an asset that requires annual impairment test,its impairment method is most likely to become an important means for the share pledged controlling shareholders to whitewash the financial statements due to the large amount of accounting estimates and subjective judgments.The research in this article enriches the related experience results of the controlling shareholder's share pledge and goodwill impairment,and has a certain reference value for policy-making impairment policy.This paper takes a sample of China's A-share listed companies between 2007 and 2016,based on the agency theory,information asymmetry theory and signal transmission theory,adopts Propensity Score Matching(PSM)and Least Squares Method(OLS),and on the basis of controlling endogenous issues,the paper tests the effect of controlling shareholder's share pledge on the impairment of goodwill in listed companies.From two aspects of internal balance and external supervision,this paper discusses the differences in the influence of the controlling shareholder's share pledge on the goodwill impairment under the structure of the different board leadership and attention of the external analysts.Combined with China's special institutional environment,the paper also examines the different performance of goodwill impairment between the state-controlled listed company and the non-state controlled listed company during the period of share pledge.The results of the research show that:(1)Compared with the firms whose controlling shareholder do not have share pledge,firms whose controlling shareholder has share pledge are more inclined to reduce the impairment of goodwill,and the greater controlling shareholder has share pledging,the less degree of goodwill impairment is;(2)The negative correlation between the ratio of controlling shareholder's share pledging and degree of impairment of goodwill is not significant in the companies with more analysts' attention,which proves that the analysts can play a supervisory role in the operation of goodwill impairment;(3)When the board of directors is a centralized leadership structure,there is a significant negative correlation between the percentage of share pledged by controlling shareholders and impairment of goodwill,and when the board of directors is a decentralized leadership structure,there is no significant correlation between the two.It shows that the leadership structure of the board can significantly affect the goodwill impairment behavior of the controlling shareholders;(4)Compared with privately-owned firms,state-owned firms have special institutional arrangements and 'soft budge constraint',the correlation between the ratio of controlling shareholder's share pledging and degree of impairment of goodwill is not significant in the state-owned firms;(5)In addition,this paper further proves that the impairment of goodwill is a means of earnings management for the controlling shareholders through the test of mediating effects.