Research On The Market Response Of Meijin Energy’s Equity Pledge

Equity pledge,as a convenient financing method,can provide a large amount of capital for company shareholders,but it can also lead to volatility in the stock market.The market reaction of equity pledge is affected by the degree of investor attention.On one hand,investor attention will help alleviate information asymmetry.If investors can accurately identify the inherent information of equity pledge,the market volatility caused by pledge will be alleviated.On the other hand,for companies with good operating conditions,the popularity of stocks is beneficial to the increase of stock prices.If investors pay attention to the company due to equity pledge,it may help to stabilize the stock price decline caused by the pledge.This paper studies the market reaction of equity pledge from the perspective of investors’ concern,which is helpful to maintain the stable and healthy development of the stock market.Meijin Energy’s equity pledge ratio ranks first in the industry.Influenced by the concept of hydrogen energy,the company is increasingly attracting attention from investors.Taking Meijin Energy as a typical case,this paper discusses the internal logical relationship between equity pledge,investor attention and market reaction on the basis of analyzing the company’s financial status,pledge status,and pledge impact,and empirically test the company’s time series data from 2016 to 2021.The research results show that: First,the equity pledge behavior of Meijin Energy shareholders will send a signal of capital shortage,aggravate investors’ concerns about shareholder encroachment,and increase the risk of shareholders’ control transfer,so it will lead to negative market reactions.Second,investor attention can reduce the degree of information asymmetry and make investors’ decision-making more rational,thus alleviating the negative market reaction caused by the equity pledge of Meijin Energy’s shareholders.According to the results of case analysis,this paper puts forward corresponding suggestions: First,companies should plan investment projects reasonably to avoid further deterioration of liquidity due to excessive investment.Second,companies should avoid transferring benefits to shareholders in order to alleviate investors’ dissatisfaction with shareholder encroachment.Third,shareholders can pledge equity when investors pay more attention,which can avoid excessive stock price volatility to a certain extent.Fourth,regulators should increase the information disclosure requirements for equity pledges,which can make the market respond more rationally to equity pledges.