Research On The Influence Of Controlling Shareholder’s Equity Pledge On Inefficient Investment Behavior Of The Company

In recent years,under the background of "deleveraging and risk prevention" in the financial market,banks are lending more cautiously.The company faces more severe financing constraints,and cannot obtain sufficient cash flow to ensure the stable development of the company.Equity pledge is favored by the controlling shareholders because of its advantages such as low information disclosure requirements,not affecting the control right and being able to activate restricted share sales.The scale and proportion of equity pledge of the controlling shareholders are increasing,and more and more cases of high proportion equity pledge occur.But at the same time,the controlling shareholders’high proportion of equity pledge caused by the risk should not be underestimated.At present,the market policies of the controlling shareholder equity pledge regulation is not strict,under the concentrated ownership structure,corporate governance mechanism and generally imperfect,high proportion of equity pledge is extremely increase shareholders will be two rights separation degree,likely to cause a shareholder’s moral hazard and high equity pledge is usually negative signals to the market,causing shares to fall,makes the control of controlling shareholders face a serious risk transfer.Since the controlling shareholders have enough rights in making investment decisions,the pledge of the controlling shareholders’ high proportion of shares may encourage the opportunistic behavior of the controlling shareholders and make them use the investment way to reach the purpose of hollowing out.On the one hand,controlling shareholders can encroach on the company’s interests and obtain private benefits through self-interested investment activities.In response to the stock price downward pressure.On the other hand,controlling shareholders may expand the scale of investment to find new growth point of the company’s performance,or tend to invest high attention hot spot,publicity for the company with good development prospects,positive message to the market,to pull up share prices,so that it continues to use control grab self-interest.Both of these aspects will lead to inefficient investment behavior of the company,which not only increases the financial risk of the company,but also has a negative impact on its operation because it occupies the resources needed for the development of the main business,resulting in a decline in operating performance,which is not conducive to the long-term development of the company.Choosing Huayi Brothers Media Corporation as a case company,our study based on the theory analysis of high proportion of controlling shareholders equity pledge and the inefficient investment behavior influence company,combined with the Huayi controlling shareholders equity pledge and investment condition,exercise the shareholder’s high proportion of equity pledge intensify inefficient investment behavior of the specific path of listed companies.This paper complements the specific action mechanism between the two,which is not involved in the empirical analysis method,and enriches the economic consequences of the pledge of controlling shareholders’equity and the influencing factors of inefficient investment behavior.This paper verifies this effect from the perspectives of investment efficiency and financial performance,discusses and analyzes its internal mechanism,and finally concludes that the high proportion of equity pledge by controlling shareholders will lead to the aggravation of inefficient investment behavior of the company,and reveals the phenomenon that shareholders will hollow out the company,maintain the stock price and grab PBC through investment.The defects of internal governance structure and imperfect external market environment play a promoting role in this influence path.At last,this paper puts forward feasible suggestions on corporate governance and market supervision,hoping to warn and correct the inefficient investment behavior caused by the high proportion of equity pledge of the controlling shareholders,improve the use efficiency of financing funds,and avoid the waste of resources,so as to maintain the long-term sustainable and stable development of the company.