Research On The Motivation And Economic Consequences Of Continuous Equity Pledge By Controlling Shareholders

Recent years,the restriction of various financing methods,such as the reduction,increase and issuance of large shareholders,has made listed companies face the dilemma of financing difficulties,and their financing costs are rising.At the same time,the shareholding pledge of the controlling shareholder has been developed rapidly as a convenient financing method,and the scale of its equity pledge has been expanding and the pledge rate has been increasing.Generally speaking,if the value of the pledged equity rises and the interest repayment on time can be guaranteed,the equity pledge can indeed reduce the financing cost of the company.If the fall of the share price may be required to add a guarantee or force to sell the equity,it may cause the controlling shareholder to lose control of the share corresponding.At present,the holding shareholders of listed companies have a continuous,high proportion of equity pledge,that is,repeated pledge,the pledge immediately after the expiration of the period,this phenomenon may mean that the company's development of long-term need for equity pledge to support the funds,worthy of the attention of stakeholders.Therefore,exploring the motive of the continuous equity pledge of the controlling shareholder and the economic consequences can provide a good reference for the current equity pledge system,the development of the company and the good operation of the capital market,so that the interest encroachment degree of the controlling shareholder in the circular equity pledge is reduced.This paper analyzes the situation of equity pledge that Leo controlling shareholders have been in existence since 2013,probes into the motivation of their equity pledge first by using the method of literature research and case analysis,and then probes into the behaviors and related economic consequences of shareholders after the pledge of equity.It is concluded that the funds derived from the continuous equity pledge of the controlling shareholders of the company may not be used exclusively for the development of the company,and the long-term separation of the two powers will promote the motivation of their interests to be more intense,so that the use of unreasonable market manipulation to stabilize the stock price,under the joint action of the two may make the company's profit.In turn,the overall value of the enterprise decline,the control of the controlling shareholder has the risk of being transferred.Finally,the paper puts forward some suggestions on the problems embodied in the continuous equity pledge of the case company,restricts the behavior of the controlling shareholder after the pledge of equity,perfects and refines the relevant legal system,so that the equity pledge can play a positive role in the development of the market economy.