Analysis Of Earnings Management Behavior Under The Pledge Of Major Shareholders' Equity

Compared with the more mature capital markets such as the United States,the equity of the company is concentrated in the new capital market in China,and the major shareholders of the company tend to hold the majority of the shares in the company.This makes the individual behavior of the major shareholders have a profound impact on the company from strategic formulation to specific operations and other aspects of the far-reaching impact.Therefore,the research on the behavior of major shareholders has always been a hot topic concerned by academia and investors.The pledge of major shareholder sundefined equity means that the major shareholders raise funds from the securities companies and other financial institutions by taking the stock rights as the pledge.Under the contradictory situation of lack of funds and difficulty of financing,the threshold of equity pledge is low,and the financing mode of convenient financing is popular among the major shareholders.Equity pledge provides a new way for financing,and to a certain extent provides a large amount of capital for many new enterprises.However,the risk of stock pledge should not be ignored,the major shareholders will face the risk of loss of control right after the pledge,so the major shareholders will have a strong incentive to carry on earnings management in order to stabilize the stock price.Hold firm control of the company.Earnings management will have a long-term impact on the development of the company,a large number of earnings management will encroach on the interests of small and medium-sized shareholders,affect the stock price of the company,and damage the long-term development of the company.Therefore,it is of theoretical and practical significance for the development of the company and the protection of investors to study the situation of earnings management after the pledge of major shareholder sundefined equity.This paper adopts the method of literature research and case study,based on the theory of private interest of control and the theory of information asymmetry.This paper studies the characteristics of the share pledge of the major shareholders in the A-share capital market and the mechanism of adopting the real earnings management after the pledge.Taking Huayi Brothers as an example,this paper takes Huayi Brothers as an example to analyze the characteristics of the present situation of the share pledge.Then it analyzes the earnings management and the subsequent impact of the pledge.Finally,some conclusions are drawn,and some suggestions are put forward to solve the problems in this case.It has been found in the literature that due to its motivation and economic consequences,the pledge of equity will cause the major shareholders of pledged equity to carry out earnings management to a certain extent.Due to the demand of strategic transformation,Huayi Brothers Co.,Ltd frequently pledged shares from 2015 to 2017.Through the analysis of Huayi Brothersundefined operation and financial situation in the last four years,it is found that Huayi Brothers has earnings management behavior after the stock pledge.After the stock pledge,Huayi Brothers realized the real earnings management to stabilize the stock price and reduce the risk of the share pledge by holding down the discretionary expenses,government subsidies,related party transactions and so on.And hope to maintain equity mortgage banks to obtain more funds.Finally,in order to protect the interests of investors,promote the healthy development of the company,standardize the order of the capital market,aiming at the risks and problems existing in the earnings management of the stock pledge,from the aspects of the pledged shares company,the supervision layer and so on,Some suggestions and suggestions are put forward.