The Research On Impact Of Controlling Shareholder's Pledge On The Performance Of Companies

Financing demand is an unavoidable problem for the development of listed companies.Controlling shareholder's share pledge is a financing method to solve the shortage of short-term funds.Compared with controlling shareholders selling shares,it not only maintains the control of listed companies,but also finances the company through pledge on company's share,which meets their own cash needs and is favored by listed companies.Although the financing method of controlling shareholder's share pledge has shown a more positive side in recent studies,that is,the controlling shareholders can get funds more quickly without losing their control to the company,while the controlling shareholders have strong pressure and motivation to improve the company's performance during the period of their share pledge,so as to stabilize the company's stock price,avoid liquidation,and avoid the transfer of control rights.Diversification has the advantages of increasing market opportunities,dispersing risks,better coping with uncertainty,and creating value for the company by the formation of high-efficiency internal funds.However,diversification may bring decentralized effects of resources and face greater managing risks.Diversification is likely to increase the complexity and difficulty of organizational management and reduce the efficiency of company manage.Therefore,the moderating effect of controlling shareholder's share pledge on performance under different levels of diversification is also worth studying.Through the analysis of the impact of controlling shareholder's share pledge on the company's performance,this paper joins the moderator role of diversification and broadens the research ideas and perspectives,so it has certain theoretical significance.For investors,it can broaden their access to corporate financing information,better understand the share pledge behavior;for regulators,it can motivate the regulator to take more effective measures to further standardize the share pledge behavior;for companies,it can provide a reference for short-term financing.Domestic and foreign literatures on the relationship between diversification and corporate performance,and the relationship between share pledge and corporate performance are abundant,but the conclusions are not consistent.In recent years,most domestic scholars believe that controlling shareholder's share pledge is not to encroach on the interests of small and medium shareholders,but to avoid the transfer of control through earnings management and other information disclosure for the sake of working capital.In recent years,the impact of controlling shareholder's share pledge on corporate performance has been studied from the perspectives of tax avoidance,equity incentive,dividend policy choice and stock price collapse risk.However,few studies have considered the diversification moderator role between share pledge and corporate performance.Therefore,this paper considers the impact of controlling shareholder's share pledge on corporate performance from the perspective of diversification.The research method of this paper is to select sample indicators,establish research hypothesis,and to use panel data regression model to analyze the financial data of Ashare listed companies in China,and try to find out the moderating effect of diversification and company nature on the relationship between them.The innovative point of this paper is to examine the moderator role of controlling shareholder's share pledge and corporate performance from the perspective of diversification.Taking 1718 A-share listed companies as research samples and using stata15.1 to process panel data,this paper empirically analyses the impact of controlling shareholder's share pledge on company performance in Shanghai and Shenzhen stock markets from 2012 to 2017,and explores the preference of controlling shareholders for share pledge under different corporate nature,as well as the degree of diversification and the nature of company's moderating effect on controlling shareholders' share pledge and company performance.The results show that there is a significant positive correlation between the pledge of controlling shareholder's share and the performance of listed companies.The study further finds that,compared with state-owned listed companies,the controlling shareholders of non-state-owned listed companies prefer to use the way of share pledge to finance;the degree of diversification has a negative regulatory effect on the relationship between share pledge of controlling shareholders and corporate performance;the nature of the company has no obvious moderator effect on the relationship between share pledge of controlling shareholders and corporate performance.Based on the above analysis,this paper puts forward two policy suggestions on improving the share pledge of controlling shareholders and considering the risks brought by diversification expansion: firstly,the regulators should improve the relevant system of share pledge;secondly,enterprises should consider the operational risks of diversification expansion.