A Study On The Economic Consequences Of Tunneling Behavior Of Large Shareholders Under Equity Pledge

With the rapid development of China's economy,the speed of upgrading and transformation of enterprises is accelerated,and the demand for capital is increasing day by day.As a kind of right pledge,the development trend of equity pledge in China in recent years is overwhelming.In 2014,the total market value of equity pledge in China was nearly RMB 2.58 trillion,but by the end of 2019,the total market value of pledge reached RMB 4.58 trillion,and in 2017,the total market value of pledge reached the peak value of RMB 6.15 trillion.As of February 28,2020,the proportion of enterprises whose pledge proportion in China's A-share market is more than 30%accounts for 14.85%of all A-share listed companies,and the proportion of enterprises whose pledge proportion is more than 50%also accounts for 2.31%.At the end of 2014,the proportion of enterprises with pledge ratio of more than 30%and 50%accounted for only 9.45%and 1.90%of A-share listed companies.It can be found that the stock pledge market in China is not only expanding gradually,but also the proportion of enterprises with high proportion of pledge is increasing year by year.However,due to the immature capital market in our country,many companies are faced with the risk of being forced to close their positions.The continuous exposure of the risk of equity pledge makes the research on the behavior of equity pledge more and more important.This paper selects the stock pledge behavior of the controlling shareholder of Gaosheng Holding Co.,Ltd.as an example.First,it briefly introduces the stock right structure,stock right pledge situation and the future development trend of Gaosheng Holding Co.,Ltd.and then combs the relevant information of the unzipped stock right of the controlling shareholder of Gaosheng holding Co.,Ltd.up to September 2019.It analyzes the stock right of Gaosheng Holding Co.,Ltd.in recent years This paper analyzes the abnormal behavior and potential motivation in the process of stock pledge of limited company.Three methods are used to analyze the economic consequences of the equity pledge by the major shareholders of Gaosheng Holding Co.,Ltd.the short-term market method can analyze the market reaction of St Gaosheng in the days before and after the tunneling event.The economic value-added method can analyze the wealth created by the enterprises for the shareholders in recent years by St Gaosheng,while the factor analysis method can analyze the debt paying ability,growth ability and operation This paper analyzes the long-term performance of St Gaosheng from four aspects:ability and profitability.Based on a large number of data analysis,we can find that stock pledge to a certain extent stimulates the tunneling behavior of large shareholders,which causes a certain degree of damage to the enterprise value and the relevant interests of the pledgee and small and medium shareholders.And in view of the deficiencies in the process of major shareholders' equity pledge,this paper puts forward relevant suggestions on how to prevent similar situations from the enterprise itself and external supervision,hoping that the research of this paper can improve the deficiencies in the supervision of shareholders' equity pledge in China,and give a wake-up call to other stakeholders of listed companies.