Equity Pledge Of Controlling Shareholders And Cost Of Debt

Equity pledge,as a new financing method,has been favored by more and more capital market participants due to its advantages of easy circulation,easy evaluation,and easy realization.Now among A-shared listed companies,"No stock is not pledged ".Equity pledge,especially the controlling shareholder's equity pledge,it is a personal behavior of shareholder,but because of the high volatility of the price of the pledged property(stock),once the stock price continues to fall,the possibility of liquidation will increase,which will be harmful to the company,even the capital market.For listed companies with controlling shareholder's equity pledges,creditors as their external investors will also face increased investment risks.So will they require higher risk premiums as their compensation,and how will the company's internal and external factor adjust the relationship? They are the focus of this paper.Based on the theory of information asymmetry,this paper takes A-share listed companies in Shanghai and Shenzhen from 2007 to 2018 as research samples to explore the relation between controlling shareholder's equity pledge and debt cost,the regulating effects of property rights and audit quality on the relationship,as well as the accounting information quality's intermediary role.Through empirical research methods such as multiple linear regression,the research finds that:(1)Compared with listed companies without controlling shareholder's equity pledges,listed companies with controlling shareholder's equity pledges bear higher debt costs,while the higher pledge rates is,the higher debt costs listed companies will bear.(2)The nature of property rights has a certain regulating effect on the former relationship.The background of state-owned property rights can reduce the increase in the debt cost of listed companies through controlling shareholder's equity pledge.(3)As an external supervision mechanism,audit quality also has some regulating effect.Listed companies hire eight large domestic accounting firms,which can effectively reduce the increase in debt costs by equity pledge.(4)Accounting information quality plays an intermediary role in the relationship.