Equity Pledge And Enterprise Value In Different Life Cycles

In a large number of literatures on the relationship between the degree of equity pledge and company value,it is believed that the degree of equity pledge has a negative correlation with the value of the company,but there are some companies in the A-share market that have a higher degree of equity pledge and have better performance.It is the existence of such enterprises that the degree of equity pledge cannot be used as a single and accurate judgment condition to judge the trend of enterprise value.In the current literature on the impact of equity pledge on value,there are two more mature paths: reducing value through the encroachment effect after equity pledge and increasing corporate value through governance after the risk of transfer of control rights increases.The two paths lead in completely opposite directions,so it is crucial to study when the two paths come into play.Some literatures analyzing the relationship between equity pledge and enterprise value believe that changes in equity pledge status(pledge degree and pledge ratio)will be transmitted to changes in enterprise value through shareholder behavior,and shareholders sensitivity to pledge status is affected by pledge motivation.Therefore,the pledge motivation of shareholders is a good starting point for research.Although some case thesiss have analyzed the motivation of equity pledge,they tend to use a lot of ink to describe the state of shareholders.This ignores the fact that business conditions are also an important variable in shareholder decision-making.Under different life cycles,the encroachment effect and governance effect have different difficulties.This thesis believes that the life cycle of the enterprise is a meaningful analysis angle.This research belongs to the exploration of how the two paths of equity pledge affecting the value work under certain conditions.Since there are also positive and negative effects on the value of the enterprise caused by multiple equity pledges in real life,this thesis believes that the life cycle of the enterprise is a good observation perspective.Through the study of enterprise cases with the above phenomenon,we will explore whether this perspective has follow-up research value.In terms of theory,this thesis first defines the concepts of major shareholders,equity pledge,life cycle and enterprise value,and clarifies the research objects in this thesis;secondly,this thesis organizes agency theory,enterprise life cycle theory and life cycle division in the field of corporate finance The content of the theory;finally,the impact path of equity pledge on enterprise value under different life cycles is sorted out.In terms of case analysis,the selected listed company Erdos has a high degree of equity concentration,and the final controller directly serves on the board of directors,which has serious internal governance problems.The decisionmaking of major shareholders in equity pledge is rarely restricted by other parties.The analysis has guiding significance for the equity pledge behavior of such enterprises in the market,and the case enterprise has a long operating period,which meets the conditions of the analysis.In the analysis,the classical cash flow combination method is used to firstly divide the life cycle of the case enterprise,and then the financial comprehensive index method is used to adjust it,and finally the life cycle division result of the case enterprise is obtained.Then,the trend of EVA value is used to express the change of enterprise value.Taking Fangda Carbon,which is also the main processing enterprise of steel smelting auxiliary materials,as a comparable enterprise,three comparison periods are set up,and the relationship between equity pledge and case enterprise value in the life cycle of the enterprise is obtained.impact results.Finally,combined with the theory combed above,explain the rationality of the case results.The case finally came to the following conclusions: When the case enterprise is in the growth period,there are many opportunities for encroachment,and the difficulty of encroachment is small,and the encroachment effect after equity pledge can play a negative role,at this time,the operating income fluctuates greatly,the investment risk is unknown,and the major shareholders are not very sensitive to the risk of control transfer,so the governance effect fails to play a positive role.For the above reasons,the value of the enterprise decreases.When the case enterprise is in a mature period,major shareholders have fewer opportunities for encroachment,more difficulty in encroachment,and no effect of encroachment.At this time,operations are stable,and major shareholders are more sensitive to the risk of transfer of control rights,so the governance effect of equity pledge plays a positive role.For the above reasons,the value of the enterprise rises.The enterprise life cycle can become an important research perspective in the field of equity pledge research.Based on the research findings,this thesis makes recommendations for companies,investors and policy makers.This thesis improves the transmission path of the impact of equity pledge on enterprise value from this perspective,and enriches the research on the motivation and economic consequences of shareholders’ equity pledge in different situations.Provide reference for listed company governance,investor investment and policy formulation.