The Effect Of Controlling Shareholder’s Share Pledge On The Level Of Corporate Charitable Donation

Share pledge has simple procedures,low financing cost and unrestricted fund use,so it has been favored by capital market.In recent years,it has become a common phenomenon for controlling shareholders to use share pledge for financing.Although share pledge alleviates the capital shortage,it contains the risk of control right transfer,aggravates the agency problem of corporate,and affects the daily operation decision and financial behavior.Charitable donation is the highest form to fulfill social responsibility,but the motives behind it are complex and varied.In reality,while the controlling shareholder has a high proportion of share pledge,the corporate makes large donations.Charitable donation may become a tool for controlling shareholders to reduce the risk of control transfer after share pledge.Based on the existing literature,this thesis takes the signal transmission theory,corporate reputation theory,social exchange theory and principal-agent theory as theoretical support,and selects Shanghai and Shenzhen A-share listed companies from 2010 to 2019 as research samples to empirically study the effect of controlling shareholders’ share pledge on corporate charitable donation.The moderating effects of media attention and check-and-balance ownership structure are tested respectively.This thesis also expands the impact of charitable donation on corporate performance under the situation of controlling shareholder share pledge.Through empirical analysis,the main conclusions are as follows:(1)Listed companies with controlling shareholder share pledge have a higher level of charitable donation,and the greater the proportion of controlling shareholder pledge,the higher the level of corporate charitable donation.(2)Media attention has a positive moderating effect on the correlation between controlling shareholder’s share pledge and the level of charitable donation,that is,compared with the companies with low media attention,the positive correlation between the share pledge of controlling shareholders and the level of charitable donation is more significant in companies with high media attention.In the situation of share pledge,the media plays an important role in supervision,information dissemination and public opinion guidance.(3)Check-and-balance ownership structure restrain the positive correlation between controlling shareholders’ share pledge and the level of charitable donation.Because the controlling shareholder’s charitable donation in the situation of share pledge is the controlling shareholder’s self-interest motive to avoid the risk of control transfer,when the equity balance is strong,the controlling shareholder’s self-interest behavior will be constrained by other major shareholders,which will reduce the level of charitable donation.(4)The charitable donation of the controlling shareholder in the situation of share pledge has a negative impact on the corporate performance,and the self-interested behavior of the controlling shareholder damages the corporate performance.According to the conclusions,the company should pay attention to prevent and deal with the management risk caused by the controlling shareholder’s share pledge,enhance the level of corporate governance and improve the business performance of the enterprise.The supervision department should strengthen the supervision of share pledge and improve the information disclosure mechanism of share pledge.Investors should pay attention to identify the motivation of corporate charitable donation,treat corporate charitable donation rationally,make investment decisions prudently,and avoid blind investment.