Research On The Motivation Of The Equity Pledge Of Shanghai RAAS Controlling Shareholder And Its Impact On The Company

Equity pledge means that the borrower pledges part of the company's shares to Banks,trust,security companies and other financial institutions to obtain loans or guarantee loans for a third party.Because of its advantages of convenience,efficiency and less regulatory constraints,equity pledge is favored by listed companies in China.The phenomenon of equity pledge is very common in China's A-share market.According to statistics,3,659 out of 3,879 listed companies in China's A-share market had taken part in equity pledge,accounting for 94.33%,of which 17.27% were pledged by market value of 30% or more,by September 30,2019.The reasons for shareholders to pledge their shares are different.If the shareholders of the listed company use the funds raised for the production and operation of the listed company,it may improve the operating conditions of the company and have a positive and favorable impact on the future development of the company.On the other hand,a large amount of loans can be obtained quickly through equity pledge,and the use of funds is not restricted,which is also likely to provide channels for major shareholders to seize the interests of the listed company,and may have an adverse impact on the operation and development of the enterprise.By means of literature research method,case analysis method,event research method,factor analysis method and other research methods,this paper firstly introduces the basic situation and risks of equity pledge,and then sorts out the previous literature on motivation,risk and influence of equity pledge,and introduces the theories related to equity pledge.Then Shanghai Raishi as an example,first introduced the basic situation of Shanghai Raishi and the situation of equity pledge,found that the company has the characteristics of high ratio of equity pledge and frequent pledge.Then,the motivation of equity pledge of Shanghai Raishi was analyzed,and it was found that the motivation of equity pledge of the company was different in different periods.In the period of merger and acquisition,the purpose of shareholders' equity pledge is mainly to pave the way for the merger and expansion of Shanghai Raishi.Then,this paper discussed the impact of Shanghai Alex equity pledge,respectively from the market reaction and financial performance and cash dividend policy analysis,found that large shareholders equity for the expansion of Shanghai Alex,can significantly improve the company's financial performance,and when used for their own investment,it will have adverse effect on corporate performance.However,no matter what the motivation is,due to information asymmetry,the announcement of equity pledge will have a negative impact on the market.At the same time,after shareholders pledge their shares,they will choose the low-distribution cash dividend policy and damage the interests of minority shareholders.Finally,based on the analysis of the case,Suggestions are put forward from the corporate level and supervision level: listed companies should strengthen corporate governance and supervise the pledge of shareholders' equity;We should establish and perfect the supervision system of equity pledge,limit the use of funds of equity pledge,and enhance the transparency of information disclosure.