The Actual Controller's Stock Pledge And The Listed Company's Debt Choice

A classic academic topic is discussed adhere,whether and how majority controlling shareholders behavior affect the company's financial policies.From the perspectives of the shareholding ratio of the first largest shareholder,the separation of the two rights,the nature of property rights and the concentration of ownership,previous research examines the economic consequences of the shareholder pledge of the major shareholder,including the influence of the characteristics of the dominant shareholder on the debt policy choice of the listed company.However,there is still lack of corresponding research on the impact of the dominant shareholders' own debt situation on the listed company's debt financing policy.Dominant shareholders occupying listed companies' capital status is still relatively common in Chinese stock market.The large shareholder equity pledge represents a relatively large pressure on their own funds.It may use listed companies as a debt financing platform to ease their financial pressure.At the same time,large shareholders' high leverage may change their risk appetite.In turn,it affects the debt financing policies of listed companies.The outbreak of the equity pledge crisis of major shareholders in 2018 triggered a lot of debt defaults of listed companies,indicating that the debt crisis of major shareholders and listed companies is always intertwined.Therefore,it is of great theoretical and practical significance to study the mechanism of the shareholder pledge behavior of large shareholders affecting the debt policy of listed companies.This paper starts from the dominant shareholder of financial pressure,observes the capital needs of the major shareholders,investigates the impact of the actual controller's equity pledge on the debt policy choice of the listed company,and tries to reveal the transmission path between the equity pledge crisis of the major shareholder and the debt crisis of the listed company.This paper takes the 2003-2017 China Shanghai and Shenzhen A-share listed companies as a research sample and indicates that the shareholder pledge of dominant shareholders has a significant impact on the choice of debt policy of listed companies.The capital pressure of major shareholders will be passed to listed companies,and the actual controllers will be highly leveraged which will lead to excessive risk exposure of listed companies.During the period of monetary easing,the high leverage of the actual controller will aggravate the transfer of capital pressure from the major shareholders to the listed company.The high leverage of the actual controller will exacerbate the agency problem between the dominant shareholders and the minority shareholders and creditors.This paper not only enriches the research scope of the economic consequences of the equity pledge of major shareholders,but also reveals the transmission path between the equity pledge crisis of large shareholders and the debt crisis of listed companies.It has guiding significance for the financial behavior of listed companies and also provides theoretical support for further standardizing the equity pledge system.