Research On The Financing Risks Of Baofeng Group's Controlling Shareholder's Equity Pledge

In recent years,the equity pledge has been widely favored by the controlling shareholders of listed companies in China because of its flexibility,convenience and low cost.Under the catalysis of financial innovation,the scale of equity pledge and the proportion of pledge have increased year by year,and China's equity pledge market has developed rapidly.Undoubtedly,equity pledge can quickly raise funds for listed companies,ease the dilemma of capital shortage,and maintain the company's original control and management rights.With the frequent occurrence of bankruptcy incidents,the risk of equity pledge financing gradually revealed,which sounded the alarm for the market.Whether it is a controlling shareholder,a small or medium-sized shareholder or other stakeholders,it is necessary to clearly understand the "double-sidedness" of equity pledge and to be more vigilant about the potential risks of equity pledge.Therefore,the in-depth analysis of the financing risk and risk response measures of controlling shareholders' equity pledge not only has theoretical significance to supplement the research on the financing risk of equity pledge,but also has practical significance to deal with the risk of controlling shareholders' equity pledge behavior in listed companies.This paper selects Baofeng Group as the research object,based on the principal-agent theory,signal theory and private-control theory,takes the concrete financial data as support,and uses the combination of qualitative analysis and quantitative analysis to conduct a comprehensive discussion on the equity pledge financing behavior of Baofeng Group.The research shows that the frequent pledge of equity by the controlling shareholders of Baofeng Group will cause negative market effects,aggravate the market risk caused by stock price fluctuations.The financial indicators analysis and factor analysis method can be used to evaluate the financial status of the company's equity pledge,it is concluded that the company's financial status continues to deteriorate and the financial risk is constantly expanding.With the help of the multivariate linear model Z-score,we can find that the company's bankruptcy probability has increased year by year and the equity of Baofeng group may be disposed.By interpreting the related transactions of Baofeng Group,it can be seen that the controlling shareholder has invaded the interests of the company in disguise and has moral hazard.At the same time,the paper analyzes the possible equity changes and points out that the absolute controlling position of the major shareholders Feng Xin has been threaten.At last,the paper puts forward suggestions from four perspectives:strengthen the supervision of the equity pledge of controlling shareholders,encourage small and medium-sized shareholders to actively participate in business activities,establish a valid legal system on equity pledge,and improve the transparency of equity pledge information.