The Influence Of Controlling Shareholders’ Pledge Of Equity On Performance Of Enterprise

Currently,there are 3,558 a-share listed companies in China.According to the statistical results of Wind database,2,694 listed companies have issued pledge announcements at present,and more than 75% of listed companies have pledged their shares.If new listed companies are excluded,this proportion will be higher.Equity pledge is a relatively convenient financing channel,through which financing constraints on controlling shareholders are alleviated to a certain extent.Moreover,if controlling shareholders return the funds obtained from equity pledge to enterprises,it will play a positive role in promoting the pledged enterprises.However,the pledge of controlling shareholders’ equity also increases the separation of control rights and ownership of controlling shareholders,which further highlights the second type of agency problem of enterprises.In recent years,as the equity pledge in China’s a-share market leads to the aggravation of market risks,and even tends to evolve into systemic risks,the academia has begun to increase the research on the equity pledge behavior.At present,scholars have different opinions on the impact of equity pledge on enterprises.The vast majority of scholars,such as: Yeh(2003),Ronald(2015)and others believe that equity pledge has a greater negative effect on enterprises,but some scholars hold the opposite opinion,for example,wang bin et al point out that equity pledge has a more positive impact on enterprises.Therefore,this paper,based on literature research and theoretical analysis,takes the pledge of controlling shareholders’ equity as the core of enterprise operation performance and considers the regulatory effect of financing constraints,and proposes three research hypotheses.Based on the data of industrial industries from 2008 to 2017,a regression model was built to study the influence of equity pledge,financing constraint and joint effect on enterprise operating performance.The empirical conclusion of this paper is as follows:(1)in non-state-owned enterprises,there is a non-linear "inverted U" relationship between the pledge ratio of the controlling shareholder’s equity and the operating performance of the enterprise.(2)in non-state-owned enterprises,the existence of enterprise financing constraints can drive enterprises to use funds more efficiently,thus improving the business performance of enterprises(3)financing constraints have obvious regulating effects on the equity pledge of controlling shareholders of non-state-owned enterprises and the business performance of enterprises.When the proportion of the controlling shareholder’s equity pledge is low,the controlling shareholder’s equity pledge has a positive effect on the enterprise’s operating performance,and the existence of corporate financing constraints weakens this positive effect.When the proportion of pledged shares of controlling shareholders is high,the proportion of pledged shares of controlling shareholders has a negative effect on the business performance of enterprises,and the existence of financing constraints of enterprises enhances the negative effect.