Research On The Motivations And Economic Consequences Of Controlling Shareholder’s Equity Pledge

After the reform of non-tradable shares,the circulation of stocks has become more and more convenient.Equity pledge has become a common financing method.Equity pledge is showing a blowout development trend among listed companies in China,and controlling shareholder’s equity pledge is becoming more and more common.Due to the special role of the controlling shareholder in corporate governance,controlling shareholder’s equity pledge will affect listed companies and other shareholders.However,while equity pledges have helped listed companies broaden financing channels,many problems happened such as tunneling by controlling shareholders,aggravating operating risks,and damaging corporate value.It is difficult for investors to effectively identify the real motivation behind the controlling shareholder’s equity pledge,and there is no clear conclusion as to how the controlling shareholder’s equity pledge behavior affects listed companies,investors,controlling shareholders themselves and pledgee.The related research on the motivations and economic consequences of controlling shareholder’s equity pledge in this thesis is of great practical significance for in-depth understanding of controlling shareholder’s equity pledge behavior,promoting the healthy development of equity pledge,protecting the interests of investors,and strengthening the supervision and management of regulatory agencies.Based on the information asymmetry theory,the principal-agen t theory,the theory of control of private interests,and the theory of signal transmission,this thesis reviews the relevant literature on controlling shareholder equity pledge.In the theoretical mechanism part,this thesis classifies the motivations of controlling shareholder’s equity pledge.From the three dimensions of listed company’s equity structure,pledged capital investment and company operation,and controlling shareholder’s behavior after the equity pledge,investors can identify the controlling shareholder’s equity pledge.Motivation provides the basis,and separately demonstrates the influence of controlling shareholder’s equity pledge behavior on listed companies,investors,controlling shareholders themselves and pledgee under different motivations.From the case analysis of the first-stage controlling shareholder Qi Jianping and the second-stage controlling shareholder Youzi,it is found that the first-stage controlling shareholder Qi Jianping’s equity pledge is a predatory equity pledge.A series of hollowing out actions have harmed the interests of listed companies and other shareholders,and the controlling shareholders themselves have been severely punished by the law.The second phase of the controlling shareholder’s pomelo asset pledge is a supporting type of equity pledge,and its equity pledge has promoted the listed companies’ strategic transformation and has also promoted the growth of wealth for all shareholders.However,the high premium mergers and acquisitions in the transformation process have also brought certain risks to listed companies.Based on the above studies,this article draws the following conclusions:External investors can identify the motivation of controlling shareholder equity pledges by combining the three dimensions of listed company equity structure,pledged capital investment and company operations,and controlling shareholder behavior after equity pledge.In addition,for listed companies,they should pay attention to the investment risks that may be caused by equity pledges motivated by the controlling shareholder’s support,and avoid the behavior of the controlling shareholder’s tunneling through equity pledge.