The Impact Of Equity Pledge Risk On Corporate Debt Credit Spreads

Equity pledge risk is an important topic in the capital market in 2018.As a widely used financing method for listed companies,large shareholders pledge part of their shares in exchange for more sufficient funds,which can not only seize investment opportunities,but also bring the company's assets.The convenience of many restrictions has become an important financing means for listed companies.Since the beginning of 2018,the overall pledge of the A-share market has increased,with a total market value of more than 4 trillion pledges,involving nearly 3,500 listed companies.However,after entering October,affected by macroeconomic factors such as global emerging market risk exposure and RMB exchange rate fluctuations,the continuous decline of the Shanghai Stock Exchange Index and the pledge company's share price has led to a “spiral” increase in pledge risk,if the pledge stock market value/pledge financing amount falls below the level.The warehouse line will lead to the forced liquidation of the pledge contract,which will cause the pessimism of market investors to bring the risk of falling stock prices,and even cause the company's shareholders to lose control of the company to bring the company's operating risks.Stocks and bonds,as two important means of corporate finance,are separate and interconnected.Bonds,also used as corporate financing methods,are also affected by the fundamentals of the company.With the second quarter of 2018,the domestic credit environment has tightened,and there are more and more stocks with risk of breaking the warehouse,which has a significant “bloodblooding effect” on the company's fundamentals.The large environment with declining liquidity superimposed the risk of equity change of the company,and the fundamentals of the company continued to deteriorate,which in turn raised the company's financing cost in the bond market,that is,the credit spread of corporate bonds.In addition to the unstable factors in the stock market,the issuance of bonds by companies is also affected by the market environment and macro policies.Since the beginning of 2018,China's capital market has repeatedly witnessed double-chip stocks and debts.The market index has repeatedly bottomed out.Most companies' stock prices have hit the liquidation line,and they are facing the risk of stocks being forced to liquidate.The bond market has frequently defaulted,which has greatly hindered China.The capital market is developing healthily.In order to study the risk transfer effect of stock market and bond market and better control the spillover of financial market risk,this paper comprehensively studies the academic achievements of scholars at home and abroad from the perspective of the equity pledge of listed companies' major shareholders.Most of the links between the market and the bond market are aimed at risk spillover effects,focusing on macroeconomics;most of the research on equity pledges focuses on the internal analysis of the stock market.This paper focuses on the enterprise and focuses on the implementation of equity pledge to the bond market.The impact of financing,starting from the individual and then the general law between the market.In addition,this paper makes an in-depth study and summary of the current development of China's bond market,and analyzes the opportunities and obstacles that the future bond market will encounter in the current macroeconomic situation.In the end,this paper selected a total of 422 listed companies in the Shanghai and Shenzhen stock markets from 2013 to 2017,covering real estate,consumer,electronics,pharmaceutical and other industries.Among them,private enterprises accounted for about 54%,state-owned enterprises 46%;the number of companies implementing equity pledge increased year by year,from 2013 to 2017,accounting for 18.5%,31.3%,40.0%,45.5% and 51.6% respectively.This paper uses the public financial report data to establish a mixed regression model first.It is found that the equity pledge of the major shareholders of listed companies will significantly increase the credit spread of bonds,and the influence of enterprises with different property rights will be different.The pledge behavior of private enterprises is relative to the state-owned nature.The pledge behavior of enterprises has a greater impact on credit spreads.Then the panel regression model is used to analyze the individual and time effects of equity pledge behavior on bond credit spreads.It is found that the influence of different individuals on the implementation of equity pledges is inconsistent.However,the overall situation is positive;the impact of equity pledge behavior on credit spreads in different years is consistent,but there is a small gap in the degree of influence;finally,the propensity score matching method is used as a solution to the existence of equity pledge and credit spread.Endogenous nature,constructing natural experiments to study the effect of equity pledge on the credit spread of corporate bonds.The results show that the use of propensity score matching method can effectively balance panel data,and the effect of implementing equity pledge on corporate bond credit spread is Positive conclusion.Through theoretical elaboration combined with empirical research results,the paper concludes that the implementation of equity pledge to enterprises will lead to the rise of financing costs in the corporate bond market,and the effect of private enterprises is greater than that of state-owned enterprises.It is not difficult to analyze that the state-owned enterprises have strong capital strength and diversified financing channels.The willingness of major shareholders to implement equity pledges is not strong,and in order to avoid the risk of controlling share transfer,the shareholding ratio of major shareholders is relatively small,and overall equity pledge brings The positive feedback effect is stronger.From this conclusion,we can also find that for private enterprises,there is still a problem of financing difficulties.In order to promote the continuous optimization of market structure and promote the stable development of the market economy,this paper puts forward several suggestions: First,in view of the fact that the controlling shareholder's equity pledge may lead to the transfer of control of the listed company,which in turn affects the stable operation of the company,the CSRC,the exchange,etc.The regulatory authorities should pay close attention to the controlling shareholder's equity pledge behavior and take relevant regulatory measures to make the necessary restrictions.Second,the proportion of equity pledges of private enterprises should be paid attention to,especially for large local private enterprises,which will timely transfusion when the stock market fluctuates greatly to prevent systemic financial risks.In addition to implementing effective policies for private enterprises,the government should supervise the implementation of policies and prevent funds from being idling and wasting..