Impact Of Controlling Shareholder's Equity Pledge On Executive Turnover

As one of the financing methods,equity pledge has intensified in the capital market,and the economic impact brought by it has received much attention.The existing research mainly studies the influence of controlling shareholder's equity pledge on listed companies from the perspectives of tunneling and interest encroachment.The results show that equity pledge aggravates the separation of cash flow rights and control rights,making the agency problem between the controlling shareholder and the minority shareholders more serious.In turn,it increases the motive of controlling shareholders to occupy the interests of listed companies.These'studies ignore the impact of controlling shareholder's equity pledge on executives who are the insiders of listed companies.As an important part of corporate governance,executive turnover is the result of the joint action of internal and external corporate governance mechanisms.As Jensen and Warner put it,executive turnover is both a key variable that constrains the power of executives and an important indicator of the efficiency of corporate governance mechanisms.In view of this,based on principal-agent theory,information asymmetry theory and private-interest of control theory,this paper takes executive turnover and succession selection as the entry point,and selects the annual data of Shanghai-Shenzhen A-share private listed companies from 2013 to 2017 as samples.The study found that the controlling shareholder's equity pledge will significantly inhibit the possibility of executive turnover due to the decline in performance,and the higher the proportion of equity pledge,the lower the possibility that executives will be forced to change due to poor performance.Such a regression result provides evidence for the collusive relationship between the controlling shareholder and the executive.On this basis,the paper further examines whether various corporate governance structures and mechanisms will have an impact on these relationships.The results show that under the circumstances of high concentration of shares and the duality of the chairman and executive,the board of directors can not effectively exercise its supervisory function.The controlling shareholder's equity pledge has a significant inhibitory effect on the possibility of executives being forced to change due to poor performance;on the contrary,the high independent director ratio and marketization index can reduce the negative impact of the controlling shareholder's equity pledge.At this time,the controlling shareholder's equity pledge does not have a significant inhibitory effect on the executive turnover caused by the decline in performance.Finally,this paper examines the impact of controlling shareholder's equity pledge on the successor source after executive turnover,and finds that controlling shareholder's equity pledge will reduce the possibility of successor executives from outside,and the higher the pledge ratio,the less likely the successor executive will come from the outside.This shows that the controlling shareholders are more inclined to hire a familiar successor from within to maintain the conspiracy relationship in order to achieve its purpose of encroachment.This paper provides new empirical evidence for the relationship between the controlling shareholder's equity pledge and executive turnover,and further supplements the research on the impact of controlling shareholders' equity pledge.