Case Study Of Equity Pledge By Major Shareholder Of Zangge Mining

In China,listed companies have regarded equity pledge as a very important financing method.Compared to other forms of financing,equity pledges do not require a lengthy and complex approval process,nor does it make major shareholders completely lose their right to control the company.Equity pledges have the advantage of relatively low financing costs and fewer restrictions,which makes the major shareholders of listed companies favor equity pledge as a financing method.But it is precisely because of the above-mentioned reasons that some listed companies have pledged equity with a high proportion of pledges and a large number of pledges.This paper chooses Zangge Mining as the case study company,precisely because the company has a high proportion of equity pledges and frequent equity pledges in a short period of time,and it ranks first among all listed companies in my country that undertake equity pledges in 2020.Therefore,taking Zangge Mining’s major shareholder’s equity pledge as the research object has a certain representativeness.Through the analysis of the motivation and economic consequences of its equity pledge,the article has certain practical significance for the study of how to avoid major shareholders from encroaching on interests through equity pledge.The thesis begins with a summary of the foreign and domestic literature on the motivations and economic consequences of equity pledges.And at the same time,defines the concept of equity pledge and explains the relevant theories used to analyse the case study.On this basis,information about Zangger Mining is presented,such as the basic information of Zangge Mining,the situation of shareholders,the process of equity pledge,etc.;then the economic consequences of equity pledge are analyzed through the event research method based on financial data.,and finally put forward targeted and constructive suggestions.The study find that the major shareholder’s equity pledge will deepen the degree of separation of control rights and cash flow rights,and enhance the major shareholders’ motivation to safeguard their own interests.Major shanreholders are cncroaching on the interests of the company through equity pledges,which will have a negative impact on the value of the business.Not only that,the high number and proportion of equity pledges by major shareholders will lead to negative market reactions and increase market risks caused by stock price fluctuations.Through the analysis of the paper,it can provide specific reference for companies related to equity pledge,avoid some adverse effects on the company’s business development caused by equity pledge,and work together for the stable and healthy development of my country’s capital market.