| With the continuous development of Chinese capital market,equity pledge has gradually become a popular financing method favored by controlling shareholders.In recent years,the pledge of equity has become increasingly fierce,the scale of pledges has been expanding,and the number of pledges has become more frequent.The pledge of equity by controlling shareholders has become a very common phenomenon in Chinese capital market.As a double-edged sword,the controlling shareholder’s equity pledge not only brings financing convenience to large shareholders,but also brings risks to listed companies,small and medium investors,and even the entire capital market.It has attracted the attention of many scholars,and the related academic results have also increased.This article explores the influencing factors of controlling shareholder’s equity pledge and the market response caused by it,in order to have a more comprehensive and in-depth understanding of controlling shareholder’s equity pledge behavior,regulate the controlling shareholder’s pledge behavior,reduce market fluctuations,and maintain the healthy and stable operation of the capital market.This paper uses the relevant data of controlling pledge of controlling shareholders’ equity in Chinese A-share listed companies from January 2007 to December 2018 as a sample to study the influencing factors of controlling pledge of controlling shareholders’ equity in China and the market response triggered by the announcement of controlling shareholder’s equity pledge.First,at the theoretical level,the motivation of controlling shareholder’s equity pledge is analyzed,and the influencing factors and market reaction mechanism are analyzed based on the equity pledge motivation.Then,the institutional background of controlling shareholder’s equity pledge of listed companies in China is summarized,and the status and characteristics of controlling shareholder’s equity pledge are analyzed using data and charts.Finally,the empirical analysis method is used to study the influencing factors and market response of controlling shareholder’s equity pledge.The research on influencing factors is mainly to find possible influencing factors based on different pledge motives and refer to existing literature and match proxy variables.Regression analysis is used to verify the impact of each factor on thecontrolling shareholder’s equity pledge behavior,while using robustness testing guarantees The stability of the results.Aiming at the market response of the controlling shareholder’s equity pledge announcement,the event research method is mainly used to test whether the pledge announcement brings an excess return on the stock,and the samples are classified according to the nature of the equity and market conditions.Different market responses,while also using trend chart analysis and robustness testing,make the empirical results richer and more reliable.Through theoretical analysis and empirical research,the conclusions obtained in this paper are as follows:(1)The scale of China’s listed companies’ controlling shareholder equity pledges has been increasing year by year,showing uneven distribution and development of sectors,wide and uneven industry distribution,and large differences in listed companies with different ownership characteristics.(2)Through theoretical analysis,the motive for pledge is summarized into three points:the motivation for financing needs when the controlling shareholder is facing a financial dilemma;the motive for strengthening control rights to purchase funds in the secondary market to acquire funds in order to consolidate the control position;the motivation for risk transfer and encroachment is separation of the two rights that caused by pledge of equity for maximizing self-interest.(3)The controlling shareholder’s equity pledge behavior is affected by many factors.Liquidity constraints,market conditions,the separation of two rights,and the motive for occupancy are all significant factors influencing the controlling shareholder’s choice of equity pledge financing methods.The greater the capital demand,the worse the market situation,the greater the separation between the two powers and the stronger the motive for the payment,the greater the willingness and scale of the controlling shareholder’s equity pledge.(4)The controlling shareholder’s equity pledge announcement will cause a significant negative market reaction,and the market will often respond to the pledge announcement in advance;the non-state-owned company’s pledge announcement will cause a more significant negative market reaction,and the state-owned enterprise’s pledge announcement will not cause a negative market reaction;compared with the rising stage of the market,the market will react negatively to the controlling shareholder’s equity pledge earlier and the reaction will be more violent.Based on the inductive analysis of the conclusions,this article proposes the following countermeasures:(1)Supervisory agencies should formulate and promulgate rules and regulations for shareholder financing behavior,strengthen supervision ofmajor shareholders’ equity pledge financing behavior,and strengthen the regulation of information disclosure of controlling shareholder equity pledges,reduce the degree of information asymmetry,and improve market effectiveness.(2)Commercial banks and other pledgees strengthen their restraint functions and formulate relevant risk prevention measures.They can set up different comprehensive review systems and track the pledged shareholders’ fund operation behavior,reduce the harm of pledged shareholders’ self-interest behavior to the pledgee’s interests,weaken the negative reaction of the market,and reduce the pledge risk caused by abnormal stock price fluctuations.(3)The pledge subject should strengthen the sense of responsibility and improve the company’s internal governance mechanism,fully evaluate its own risk tolerance,establish an internal supervision system,and do a good job in business management to enhance the value of listed companies to enhance investor confidence.(4)Investors should take a rational view of the financing behavior of the major shareholders of listed companies,establish a value investment concept,improve their investment capabilities,strengthen their ability to identify various types of information,conduct rational analysis,reduce blind follow-up behavior,and make correct investment decisions. |
