A Research On The Impact Of Large Shareholder Equity Pledge Financing On Corporate Performance

With the continuous development of China's capital market,equity pledge financing has gradually grown as an emerging financing method.Compared with the traditional financing methods,equity pledge financing has the characteristics of low financing threshold and simple procedures.Due to the high liquidity of listed companies,the risk of financial institutions achieving pledge rights is relatively low.Major shareholders of the company and financial institutions that are the partners are willing to participate in such financing activities.This makes the major shareholders of listed companies conduct equity pledge to obtain funds more and more frequently,and equity pledge financing has gradually become one of the important financing channels of China's capital market.At present,China's A-share market almost presents a “city-wide participation” equity pledge.As of the last trading day of 2018,the total number of shares pledge in the A-share market was 634.977 billion shares,the market pledge shares accounted for 9.92% of the total share capital,and the market pledge total market value was about 433.761 billion yuan,more than 140 listed companies' major shareholder pledge.The ratio is over 50%.With the vigorous development of equity pledge financing,while expanding corporate financing channels and improving China's capital market,the continuous expansion of its market volume has accumulated a lot of potential risks.Recently,the stock prices of a number of listed companies have fallen below the equity pledge replenishment line,and frequent outbreaks have occurred,and the market default risk has intensified,making it even more important to further study the relationship between equity pledge financing methods and company performance.Based on this,this thesis conducts theoretical analysis based on the theory of principal-agent theory,information asymmetry theory,and private interest theory of control rights.Based on the data of China's A-share market listed companies from 2014 to 2017,this paper uses empirical research methods to study The impact of the large shareholder equity pledge financing behavior on the company's performance in the Chinese market.In order to further explore how the impact is realized,from the perspective of investment efficiency,this paper studies the mediating role of the intermediary variable of investment efficiency in the impact of large shareholders' equity pledge financing on company performance.The conclusions of the study indicate that the large shareholder equity pledge financing behavior will have a negative impact on the company's performance,and the investment efficiency will play a mediating effect in this negative impact.That is,the large shareholder equity pledge financing behavior will affect the company's investment efficiency negatively,and then Corporate performance has a negative impact.Moreover,the negative effect of large shareholder equity pledge financing on corporate performance and the negative effect on investment efficiency are more pronounced in state-owned companies.Finally,based on the research conclusions,relevant policy recommendations are proposed.The research in this paper expands the research scope of equity pledge financing and contributes to the regulation of the development of equity pledge financing.