Impact Of Large Shareholder Equity Pledge On Corporate Performance And Risk Prevention

Equity pledge has become one of the more common financing methods for shareholders of listed companies.As of January 2020,the maximum number of companies participating in equity pledges in the A-share market reached 3469,accounting for 97% of the A-share listed companies.Equity pledges have become commonplace for the current market and shareholders.In recent years,due to the news of equity pledges of “default breach and liquidation”,it not only has a great impact on the changes in the equity of listed companies and their operations,but also often causes the stock prices of listed companies to collapse,thereby forming a short-term sharp decline in the A-share market.Equity pledge is an effective financing method for large shareholders.Although it is formally expressed as the personal behavior of large shareholders,in actual operation,this personal behavior of large shareholders will have a significant impact on the financial status and operating performance of listed companies..In Taiwan 's early equity pledge,most of the controlling shareholder 's equity pledge was for their own needs,using the pledged funds to purchase stocks to enhance control of the company and prevent malicious acquisitions.Some large shareholders have pledged equity to provide listed companies with liquidity to operate their businesses and solve the problem of shortage of corporate capital chains,especially for special industries that require long-term financial support,such as the Internet and other light asset industries that lack fixed asset mortgage financing And the real estate industry that needs a lot of liquidity.However,due to the problem of agency theory and information asymmetry in the implementation of equity pledge,equity pledge is usually also a way for large shareholders to encroach on the interests of small and medium shareholders.Large shareholders hold high-priced securities for personal benefit by pledge,which is toretain sufficient control of the company and obtain sufficient cash flow to hold a large amount of capital to recover the initial investment expenditure;when the volatility of securities drops to a certain limit If you choose not to repay the pledged funds,this separation of ownership and control will damage the interests of other shareholders,and it will deepen the second type of agency problems between large shareholders and small and medium shareholders,which will have a negative impact on the company's operating performance.Therefore,based on this,this article conducts theoretical analysis and empirical research on the equity pledge of large shareholders,discusses the impact of equity pledge on the performance of listed companies in theory and practice,and proposes specific ideas and measures for risk prevention.Based on the principal-agent theory and the information asymmetry theory,this article selects the stock pledge related data of A-share listed companies from 2014 to2018 as a sample for research.By analyzing the impact of relevant factors between the behavior of the major shareholders and the corporate structure on corporate performance,the Risks can be prevented by factors that are artificially controlled,so as to reduce the losses of all parties involved in market transactions.Through sample regression through the model,the obtained research results show that: the equity pledge ratio has a negative correlation with corporate performance;equity concentration has a positive correlation with corporate performance,that is,the higher the proportion of the largest shareholder equity,the higher the corporate performance;There is a positive correlation between scale and corporate performance.Property rights structure regulates equity pledges,that is,private companies have a positive correlation with corporate performance;industry nature regulates equity pledges,that is,cultural media industry equity pledges have negative effects on corporate performance Correlation: The scale of a company is positively related to its performance,that is,the more its total assets,the higher its performance.And on this basis,further analysis of the property rights structure and shareholding structure,the financing issues in the market,and the regulatory authorities,financial institutions and enterprises themselves in the process ofequity pledge to put forward relevant suggestions to minimize the non-systemic risks in the pledge process,Make sufficient preparations for early valuations and investigations,make early warning systems in mid-term risk control and volatility monitoring,to ensure that equity pledge financing can be more secure and stable in the Chinese market,and can meet the interests of most people.