Research On The Causes And Economic Consequences Of Pledge Of Controlling Shareholder’s Equity In Private Listed Companies

In the fast-developing economic era and increasingly perfect market place,Chinese means of channels become more multiple and equity pledge is fashionable for more firms last decade.Because of private companies lack of financing channels and capital advantages compared with state-owned businesses.Besides equity pledge has less restrictive clause,high equity liquidity,simple operation and strong liquidity.Therefore,controlling shareholder of private enterprises is the main body.However,along with the proportion pledged has increases,in the past two years pledge risk becomes issue to resolve.Therefore,in allusion to its negative efforts,it turns to hot spot to research.Based on domestic and foreign compilation about equity pledge motives and economic impacts,and use related concepts and theories,this article research private listed companies’ equity pledge development situation,incentive and economic effect.Adopt case study and other research technique,taking *ST Zangge as the research object,recommend controlling shareholder equity pledges’ current situation,explore incentive and economic effect.The research found that *ST Zangge’s controlling shareholder use equity pledge to meet financing needs,encroach on benefits and transfer risks.Also controlling shareholder equity pledge’s mode deteriorates market performance,financial condition,corporate values and encroach shareholders’ interests.It is hoped that to enlighten firms and regulatory authorities to standardize equity pledge behavior and make the best of its advantages.