The Impact Of Equity Pledge Financing Of Xin Yan Company On Corporate Value

The operation of an enterprise cannot be separated from capital,but the difficulty of financing has always been a severe test for the enterprise.Under these circumstances,equity pledge financing has attracted people’s attention due to its flexible and convenient characteristics.In recent years,the scale of China’s equity pledge has continued to increase.Equity pledge,as a tool that can alleviate financing constraints,has indeed promoted the development of listed companies,but the risk of "crash" in the stock market has also sounded the alarm for the capital market.Therefore,equity pledge financing also has risks,and it is not a panacea.As the shareholders who can influence the control of the company,the major shareholders have their own special attributes,and their decisions usually have a great impact on the company.Therefore,the economic consequences of the pledge of the equity of the major shareholders deserve our further analysis.This article takes the case of the shareholder’s equity pledge of Xin Yan company as the research object to study the influence of the pledge of shareholder’s equity on the company’s value.First of all,to sort out the relevant literature,most of the literature is based on the second agency theory of the principal-agent theory that the pledge of large shareholder equity will exacerbate the separation of the two rights and trigger more serious agency problems;Secondly,introduce relevant theories and basic concepts such as principal-agent theory,signal transmission theory,equity pledge,etc;Thirdly,the paper introduces the case of equity pledge company,measures the short-term impact of equity pledge on the company value by calculating the short-term cumulative excess return rate,and studies the long-term impact of equity pledge on the company value by calculating EVA.Through the above analysis,it has been found that the high frequency and large proportion of equity pledges by LS company’s major shareholders have had a negative impact on the company’s value.Based on the above results and in light of the analysis results of corporate governance,this paper proposes suggestions for improvements in related system construction,corporate governance,and information disclosure.