A Case Study Of Equity Pledge By The Controlling Shareholder Of Sansheng Co., Ltd

In recent years,considering the limitations of traditional financing methods,equity pledge has gradually become a popular financing channel in China's capital market,relying on its advantages of low financing cost,few restrictions and convenient financing.For small and medium-sized private listed companies,fund raising and operation is an important link in their business development.Compared with state-owned enterprises,private enterprises do not have obvious advantages in financing,and the difficulty of financing in the traditional way is gradually increasing.Therefore,the controlling shareholders prefer the financing method of equity pledge.Although equity pledge has solved the financing problem,the increasing proportion of equity pledge also makes the company face a situation out of control,showing a trend of no shares,which increases the risk caused by equity pledge.In the study,it is found that after frequent and high proportion of equity pledge,controlling shareholders are more likely to have agency problems,and are prone to major shareholder's capital occupation,related party transaction and related party guarantee and other interests encroachment.Controlling shareholders use equity pledge to satisfy their personal desires,thus damaging the interests of the company.This paper selects Sansheng Shares in the building materials and cement industry as the case study object.The equity pledge proportion of Sansheng Shares is relatively high in the industry,which has a certain representability.First of all,after analyzing the operating conditions,equity structure and the basic situation of equity pledge of Sansheng,the motivation of equity pledge of Sansheng's controlling shareholders is further explored.Secondly,the agent behavior caused by the controlling shareholder after the stock pledge is analyzed.Thirdly,use the event study method,financial index analysis method and Tobin Q value analysis method to analyze the impact of equity pledge on enterprises.After a series of studies,it is shown that the high frequency and high proportion of equity pledge has an adverse effect on the value of Sansheng Shares.Finally,from the level of corporate governance and market regulation,it concluded that case enlightenment,hope to be able to for the reference to other listed companies and regulators,can cause small and medium-sized private listed company and controlling shareholder attaches great importance to the high proportion of equity pledge,mitigate the negative effects of equity pledge to company and better use of equity pledge.