The Impact Of Equity Pledge On The Risk Of Stock Price Collapse From The Perspective Of Investors' Attention

When companies face rising capital needs,their shareholders will pledge their equity to obtain sufficient cash flow.These raised funds can temporarily meet the capital needs of enterprises,thus improving the financial performance of enterprises.However,equity pledge can bring a new risk to the mortgagor and the enterprise,that is,the risk of control transfer.Therefore,it is important to study the influence of equity pledge of major shareholders on the risk of stock price crash in order to maintain the stability of China's stock market.In China,the main investors in the stock market are individual investors.Individual investors often have a low level of knowledge and limited information sources.However,in the Internet era,using search engines has become an important way for individual investors to obtain information,and thus the information from Internet has become the main decision-making basis for investors.Therefore,investor attention and investor information search behavior are bound to become one of the important factors affecting the company's stock price.It usually acts as a liquidity role in trading.Stock price crash risk is a hot topic in recent years.Although a large number of scholars have studied stock price crash,few scholars have studied the impact of equity pledge on stock price crash risk from the perspective of investors' attention.Based on this,this paper conducts a research from the perspective of investor attention,and analyzes the impact of investor attention on China's stock market from both theoretical and empirical aspects.Based on the data of Chinese A-share companies from 2013 to 2018,this paper studies the impact of equity pledge of major shareholders and investor attention and their interactions on stock price crash risk.The findings are as follows:(1)Equity pledge of major shareholders will increase the risk of stock price crash.Moreover,the risk of a share price collapse increases as the proportion of pledged equity to the total equity held by major shareholders increases.This indicates that the benefits of minority shareholders will be damaged by the equity pledge of major shareholders.In order to protect the stable and orderly development of China's capital market and the interests of China's small and medium-sized investors,the regulatory authorities should strengthen the supervision of the pledge of major shareholders' equity to protect small and medium-sized investors and China's capital market.(2)Investors' attention can mitigate the risk of stock price collapse.The result of empirical research shows that investors' attention is significantly negatively correlated with the risk of stock price crash.This is because investors' attention can promote the dissemination of information of listed companies and accelerate the process of integrating information into the stock price.As a result,the risk of stock price crash can be reduced.(3)Investors' attention can weaken the impact of equity pledge of major shareholders on stock price crash.After the pledge of the controlling shareholder's equity,the controlling shareholder may face the risk of margin call or risk to unwind due to the decline of the share price in the future.However,when faced with the potential risks brought by the pledge,major shareholders may use all possible methods to influence the stock price to maintain the stability of the stock price and even improve the stock price,such as stock repurchase,stock dividend,real earnings management,strategic optimistic disclosure of corporate performance,in order to attract the attention of ordinary investors.On the one hand,investors' attention can increase the information content of stock price;on the other hand,investors' attention can enhance the liquidity of stock trading,thereby leading to weakening the impact of equity pledge on stock price crash.