Research On The Motivation And Economic Consequences Of Strategic Charitable Donation Under The Background Of Large Shareholders’ Equity Pledge

It has become a common phenomenon in China’s capital market in recent years that controlling shareholders obtain pledge loans from banks and other financial institutions through pledged equity.In essence,equity pledge should be the economic behavior of controlling shareholders to ease their own financial constraints,which has nothing to do with the business decisions of listed companies.However,when the company’s share price falls to the pledge closing line,the pledgee can close the position of the pledged equity,and the controlling shareholder may lose the control of the company.Control right is the resource basis for controlling shareholders to realize related party transactions,tunneling or fund occupation,so it is usually the most important power of controlling shareholders.Considering the transfer risk of controlling shareholders,equity pledge may have an important impact on accounting policies and financial behavior.The behavior of large-scale equity pledge of controlling shareholders has aroused extensive concern of scholars.Many scholars have explored whether the equity pledge strategy can directly affect the firm’s equity pledge strategy.Based on the analysis framework of the existing literature,this paper attempts to explore whether there is strategic donation behavior in the context of controlling shareholders’ equity pledge from the perspective of corporate social responsibility,so as to further reveal the microeconomic impact of controlling shareholders’ equity pledge.Based on the case of Beijing Oriental garden environment Co.,Ltd.,this paper studies the causes and economic consequences of this kind of behavior from the connection between the major shareholders’ equity pledge and their charity behavior.Through the above analysis,based on the stock price and rent-seeking motivation,positive signals such as charitable donation behavior are helpful to raise the stock price.Charitable donation as a positive signal has a "cardiotonic effect",can hedge stocksThe negative signal of pledge of rights.The charitable donation at the expense of profits can convey an optimistic signal of sufficient free cash flow to investors,which can effectively calm investors’ panic caused by negative signals of equity pledge.The intangible capital and tangible capital brought by charitable donation can jointly resist the business risks brought by the pledge of major shareholders.The major shareholders will take negative strategies to deal with the risk of control right transfer.This will intensify the contradiction between the enterprise and its stakeholders,increase the business risk,and damage the social reputation and image of the enterprise.And the pro social charitable donation is the discretionary behavior of enterprises,which can accumulate intangible moral capital for enterprises.Through the reputation insurance mechanism,charitable donation can protect the social network capital and income flow of enterprises and prevent the loss of economic value caused by business risks.At the same time,providing political funds to officials can enable enterprises to obtain supportive policies conducive to their development.As a kind of "political donation",charitable donation can win the high-quality business environment provided by the government,such as financing convenience,government subsidies and good investment opportunities.The inflow of these tangible capital can alleviate the adverse situation of performance decline caused by equity pledge of major shareholders and stabilize the stock price.Through this case,this paper enriches the research on the economic consequences of large shareholders’ equity pledge.Taking corporate social responsibility performance as the breakthrough point,this paper discusses the impact of large shareholders’ equity pledge on listed companies’ charitable donations,and expands the research on large shareholders’ charitable donation behavior.At the same time,we should be alert to the "chaos" of equity pledge of listed companies,prevent the market value management behavior of controlling shareholders,pay attention to the intrinsic motivation of corporate charitable donation,and be vigilant against being "hypocritical" marketing by the enterprise management.