Case Study On The Risk Of Equity Pledge Of Controlling Shareholders Of Dohia Company

At present,as a way to meet the financing needs of listed companies,equity pledge is sought after by many controlling shareholders of listed companies with its advantages of low financing cost and high efficiency.First of all,from the perspective of the actual controller,the act of equity pledge is the behavior of the controlling shareholders themselves,which does not affect the internal company's equity structure and the original control right.However,after the equity pledge,because of the impact of the company's operation,the stock price will fluctuate indefinitely.If the stock price falls to the close out line,it will face the risk of forced close out,which will make the controlling shareholders lose the control of the listed company and bring risks to the listed company and the investors in the market.This paper studies the case of Dohia company,analyzes the risks behind the high proportion of equity pledge of controlling shareholders,and analyzes it from three aspects:listed companies,pledgees,and small and medium investors.From the perspective of listed companies,the high proportion of equity pledge first brings liquidity risk within the company.When the stock price falls further,the controlling shareholders of the company will face the risk of control transfer;from the perspective of the pledgee,it mainly includes the disposal risk and moral risk after equity pledge,which is reflected in the stock price after equity pledge due to the poor operation of the company After the fall,it touched the closing line,and the pledgee had to sell in the secondary market but faced the consequences of unable to recover the cost.Moral hazard is reflected in the fact that the controlling shareholders of the company may empty the company through equity pledge to meet their own interests;from the perspective of small and medium-sized investors,the historical simulation method can be used to calculate the VaR value of the shares pledged by the controlling shareholders,and then the quantitative analysis method can be used to calculate the market risk faced by the investors after the shares pledged by the controlling shareholders.It can be concluded that from the perspective of the company itself,the debt paying ability,profitability and cash flow of the company will be further reduced after the high proportion of equity pledge of the controlling shareholder bursts,thus causing liquidity risk.From the point of view of the controlling shareholders themselves,the high proportion of equity pledge by the controlling shareholders will affect the operation of the listed company.If the poor operation makes the controlling shareholders unable to repay the loan,it will affect their equity structure and control rights of the controlling shareholders.From the perspective of small and mediumsized investors,we use the historical simulation method to calculate the VaR value,estimatethe pledge rate of controlling shareholders,the stock pledge price and the warning line,and compare the results with the actual stock price of Dohiai,and find that the stock pledge behavior of controlling shareholders will bring the market risk of stock price decline.At last,some suggestions are put forward.Firstly,listed companies should increase the degree of information disclosure of equity pledge,financial institutions as pledgees should make full investigation before equity pledge,regulatory agencies should do a good job in risk early warning mechanism,and increase penalties for violations;small and medium-sized shareholders should unite to strengthen the supervision of equity pledge process,improve their own voice,and avoid their own interests Interests are violated.