The Influence Of The Equity Pledge Of The Controlling Shareholder On The Cost Of The Listed Company's New Bonds Issue

At the beginning of 2018,under the influence of a variety of factors at home and abroad,China's stock market fell sharply,and a number of enterprises suffered from stock price explosion.Especially for listed companies with equity pledge,the pressure was huge,and the risk of equity pledge was exposed to the market and regulators,attracting the attention of the public.From the current point of view,China's listed companies generally have the characteristics of highly concentrated equity,controlling shareholders financing with a high proportion of equity pledge has gradually become the market norm.While equity pledge financing of controlling shareholders provides a convenient way to help alleviate funding needs,but the high proportion of equity pledge would increase the share price volatility or even collapse resulting in serious consequences if controlling shareholders fail to meet margin calls which leads to shares being liquidated.In this situation,a significant risk is buried to the listed companies.Therefore,what are the economic consequences of the pledge of controlling shareholders' equity? In the context of the increasing default rate of bonds in China year by year,how should bond investors understand the impact of the pledge of controlling shareholders' equity on the risk of listed companies? How will the pledge of controlling shareholders' equity affect the financing cost of newly issued bonds? Obviously,it is of great theoretical and practical significance to study these problems.However,few literatures analyzed the influence of the pledge of controlling shareholders on the pricing of newly issued bonds of listed companies from the perspective of bond investors.Therefore,this paper selects the data of newly issued corporate bonds of China's A-share listed companies from 2007 to 2018 and the equity pledge data of relevant controlling shareholders to conduct an empirical analysis on the impact of the equity pledge of controlling shareholders of listed companies on the pricing of newly issued bonds.It is found that the pledge of controlling shareholders' equity will increase the financing cost of listed companies' bonds,and the higher the proportion of controlling shareholders' equity pledge is,the larger the credit spread of corporate bonds will be.Compared with private enterprises,the pledge of controlling shareholders' equity in state-owned enterprises has a more significant impact on the financing cost of corporate bonds.Moreover,the higher the proportion of the pledge of controlling shareholders' equity in stateowned enterprises is,the higher the financing cost of listed companies will be.At the same time,it is also found that the higher the degree of equity checks and balances,the less the influence of the pledge of controlling shareholders on the financing cost of listed companies' bonds.In addition,this paper also attempts to explore the influence path of controlling shareholders' equity pledge on the credit spread of corporate bonds.Through further research,it is found that the corporate value has no significant regulating effect on the relationship between controlling shareholders' equity pledge and bond credit spread.Meanwhile,the degree of authentic earnings management has a significant positive regulating effect on the relationship between the equity pledge of controlling shareholders and the credit spread of bonds.The higher the degree of authentic earnings management of listed companies is,the stronger the positive effect of the equity pledge of controlling shareholders on the credit spread of companies is.All in all,this article further studies the economic consequences of the controlling shareholder equity pledge from the perspective of bond investors.This article has expanded the existing research perspectives,and the conclusion has proved to be helpful for bond investors understanding the impact of the controlling shareholder equity pledge on the risk of listed companies,which can avoid investment risk and increase the protection of bond investors interests.And at the same time,according to the study the suggestions put forward about the problem of the current capital market in our country are benefit to further standardize the order of the equity market and improve the modern corporate governance mechanism,thus promoting the further improvement of the capital market in China,which has a great practical significance.