Research On The Impact Of The Pledge Of Major Shareholders’ Equity Of N Company On The Company Value

It is an important channel for the company to gain an advantage in the market competition to raise funds quickly and efficiently from the outside.The equity pledge is favored by the pledgor because of its strong liquidity,easy realization and the pledgor’s maintaining the control of the company during the pledge period.However,if the share price continues to decline,falling below the warning line and even the closing line,and the major shareholder of the pledgor does not have enough ability to repurchase the shares in time,it may lead to the forced closing of the pledged shares,thus changing the control of the original major shareholder over its company.Another situation that the stock is dominant is common in China’s capital market,and small and medium-sized investors and other retail investors generally have herd behavior when investing.In the context of the forced liquidation of the stock and a large number of stock sales,large-scale equity pledge will aggravate the volatility of the stock market and impact the stability of the capital market.This paper selects N Company,which is a typical and representative company in the gear industry and has serious equity pledge of major shareholders,as the research object to introduce and analyze the situation of equity pledge of the company and its related motivations.As for the value impact,we will first analyze each action path,and then quantitatively analyze the impact of major shareholders’ equity pledge on the company’s value from the aspects of short-term and long-term market effects,financial situation and EVA model.Finally,we draw relevant countermeasures and suggestions for different levels,hoping to play a certain reference role for stakeholders to reduce the adverse impact of equity pledge business on the value of the company.According to the research in this paper,it is beneficial for the company’s value that the major shareholders invest equity pledge financing in the company’s operation and development,research and development innovation,moderate investment and moderate market value management in order to maintain the control right.However,the separation of the two rights has seriously led to the actual controller and the person acting in concert to improve the risk.The high amount of pledge financing has been invested in high-risk projects and mergers and acquisitions,and the occupation of a large amount of funds has exacerbated the company’s financial risk,The failure of its major M&A directly triggered the crisis.Excessive expansion,excessive market value management and associated guarantee caused huge losses to Company N itself,exacerbated the risk of stock price collapse and control transfer,and thus reduced the value of the company.