Research On The Equity Pledge Risks Of The Major Shareholders In The Pharmaceutical Industry

The major shareholder’s equity pledge refers to a financing act in which a controlling shareholder borrows funds from a pledgee taking this company’s equity as a pledge guarantee.As of the end of 2018,the total market value of the Shenzhen Stock Exchange’s stock pledged repurchase pledged stocks was 2,001.00 trillion yuan,accounting for 4.60%of the total market value of the two markets,of which the tradable shares pledged market value was 1,336.00 trillion yuan,accounting for 66.80% of the total pledged market value.Such a large amount of equity pledge financing has actually brought high risks and challenges to China’s listed companies and China’s stock market.This article mainly analyzes the equity pledge situation of the majority shareholder of Guizhou Bailing,the representative company in the pharmaceutical industry.As far as industry analysis is concerned,this article divides listed companies in subdivided industries into pledged groups and non-pledged groups based on the existence of major shareholder equity pledges.And the corresponding index is constructed based on the stock price during 2011-2018.Between the two groups and the overall index,it is found that the stock prices of listed companies both in the pledged group and the non-pledged group increased from 2011 to 2018,but the standard deviation of the pledged group is more obvious and the volatility is larger.This shows that the stock price of listed companies in the pledge group is more uncertain,that is,equity pledge will bring a higher level of risk to the company.In the analysis of Guizhou Bailing Company,through the analysis of changes in financial indicators of Guizhou Bailing Company since its listing,the appropriation of the interests of small and medium shareholders,the impact on the company’s value,and the analysis of changes in the company’s bankruptcy risk indicators,the conclusion was drawn that Guizhou Bailing Company’s major shareholder equity pledges have increased Guizhou Bailing’s overall risk level.In order to deal with the risks and challenges brought by the equity pledge of major shareholders,it can be considered from three aspects: the system,the pledger and the pledgee.First of all,from the perspective of the system,we can deal with it by clarifying property rights,limiting the proportion of pledges,and introducing the withdrawal mechanism of small and medium shareholders;Secondly,from the perspective of the pledger,we mainly respond to it by strengthening company’s internal control policy and their external information disclosure system.Last but not the least,from the perspective of the pledgee,we can deal with it by strengthening the due diligence of the business and the continuous management of the business duration in order to control the risk of the equity pledge of the major shareholders.