A Study On The Economic Consequences Of The Pledge Of Major Shareholders' Equity

With the gradual slowdown of Chinese economic growth,the loan policies of banks and other financial institutions have become increasingly strict,and the difficulty of refinancing of listed companies has increased.As a new financing method,equity pledge is widely used by large shareholders of listed companies due to its advantages of convenience and less constraints.By using equity pledge financing,major shareholders can ease the financing constraints faced by listed companies and promote the normal development of business activities.However,there are some risks in the pledge of major shareholders.In recent years,the events that the listed companies fall into crisis due to the pledge of major shareholders' equity occur frequently in the capital market,which not only damages the interests of investors,but also disturbs the development order of the capital market.Nangang Co.,Ltd.and Qianshan Pharmaceutical Machinery Co.,Ltd.are both private listed companies.In the face of financing demand,the major shareholders of the two companies provide financial support to the company by using a high proportion of equity pledge.The subsequent operation performance of Nangang Co.,Ltd.has been greatly improved,but the operation status of Qianshan pharmaceutical machinery has gradually deteriorated.In this paper,Nangang and Qianshan Pharmaceutical Machinery Co.,Ltd.are taken as the research objects,and the different economic consequences caused by the pledge of major shareholders' equity are compared and analyzed.It is found that the motivation of equity pledge of large shareholders of Nangang and Qianshan Pharmaceutical Machinery Co.,Ltd.starts from financing demand,but the initial motivation of pledge changes due to the change of the company's operating conditions in the later period;the behavior of large shareholders after equity pledge is affected to a certain extent by the characteristics of legal person,and natural shareholders are more inclined to usurp the interests of listed companies by equity pledge than legal shareholders;large shareholders' equity The behavior difference after the pledge will lead to the change of the company's financial performance;the pledge of major shareholders' equity will usually lead to a negative market reaction,and the market value of the company will decrease in the short term.Based on the above conclusions,this paper puts forward that listed companies should strictly manage the capital of the major shareholders' equity pledge,and control the major shareholders' equity pledge and its subsequent behaviors,so as to reduce the possibility of the major shareholders to seize the company's interests by using illegal behaviors;at the same time,the regulatory authorities should strengthen the control of the major shareholders' equity pledge and its subsequent behaviors,and improve the information disclosure system of equity pledge In order to standardize the development of equity pledge business of Listed Companies in China.