Controlling Shareholder’s Equity Pledge,Media Attention And Enterprise Value

Equity pledge has become a common financing method for listed companies due to its low cost and simple procedures.Controlling shareholders are even more keener to obtain funds through equity pledge.Controlling shareholders have control rights in listed companies and greater impacts on major issues such as company business decisions and senior management elections.On the one hand,the controlling shareholder’s equity pledge can help the company solve the capital problem,but on the other hand,it also strengthens the controlling shareholder’s interest embezzlement motivation,thus causing damage to the enterprise value.Therefore,the economic consequences of controlling shareholders’ equity pledge on listed companies have become a research hotspot in the current academic circles.With the development of internet technology,the role of media reports on the governance of listed companies can not be ignored any more.As the disseminator and external monitor of company informations,the media plays a regulating role in the relationship between controlling shareholder’s equity pledge and enterprise value from the perspective of alleviating information asymmetry and causing government agencies to intervene.Based on this,this paper makes an in-depth study of influences of controlling shareholder’s equity pledge ratio and methods on enterprise value,and studies the moderating effect of media attention in detail from two perspectives of degree and tendency.This paper firstly finds out defects of the current research by summarizing relevant literature,and then deeply discusses influences of controlling shareholder’s equity pledge ratio and methods on the enterprise value combined with classical theories such as principal-agent.At the same time,the moderating effect of media attention is analyzed,and research hypotheses are put forward.Then,A-share listed companies with controlling shareholders’ equity pledge behavior in Shanghai and Shenzhen stock exchanges from 2013 to 2018 are selected as research objects.Multiple linear regression and other methods are used to verify hypotheses.The results show that:(1)There is an inverted U-shaped relationship between the controlling shareholders’ equity pledge ratio and enterprise value,and it is more significant in non-state-owned enterprises.(2)The degree of media attention positively regulates the relationship between the pledge ratio and enterprise value.In other words,when the lower pledge ratio promotes the increase of enterprise value,the higher the media attention,the stronger the positive relationship between the pledge ratio and enterprise value.And when the higher the pledge ratio inhibits the increase of corporate value,the higher the media attention,the weaker the negative relationship between the pledge ratio and enterprise value.Compared with non-negative reports,negative reports have a more significant positive regulatory effect.(3)Compared with the non-pledged repurchase equity pledge,pledged repurchase equity pledge can significantly increases the enterprise value,and it is more significant in non-state-owned enterprises.(4)The degree of media attention significantly enhances the promoting effect of pledged repurchase equity pledge on enterprise value,and compared with non-negative reports,negative reports have a more significant positive moderating effect.Finally,based on the research conclusions,policy recommendations are made to listed companies,media and investors.This paper comprehensively examines impacts of controlling shareholder’s equity pledge on enterprise value from the ratio and methods,and innovatively studies the moderating effect of media attention and tendency on the relationship between equity pledge and enterprise value.The research in this article not only enriches the research on the economic consequences of equity pledge,but also provides a theoretical reference for listed companies to rationally arrange equity pledge plans,the media give full play to their supervisory role,and investors make correct investment decisions.