Research On Huayi Electric Company Limited’s Equity Pledge

Equity pledge financing started late in my country,but it has developed rapidly and has formed a huge scale so far.However,with the continuous expansion of the scale of equity pledge in my country,the corresponding normative system has not been updated and perfected in time.In order to further understand the risks caused by equity pledge,this paper analyzes the case of Huayi Electric Company Limited from the perspective of controlling shareholder’s interest encroachment,and discusses the means,causes and economic consequences of controlling shareholder’s interest encroachment after controlling shareholder’s equity pledge.In this regard,some suggestions are put forward to prevent the risk of equity pledge.This paper believes that after a high proportion of equity pledge by the controlling shareholder,due to the ownership structure is highly concentrated,the irregular corporate governance and the lack of external supervision,the controlling shareholder’s motive for encroachment has been strengthened,and the controlling shareholder has encroached on the interests of the listed company after the equity pledge.increased risk.Specifically,controlling shareholders often use illegal guarantees and non-operating capital occupation to encroach on interests.At the same time,in order to make the controlling shareholder continue to encroach on the rights and interests of the listed company and cover up the fact of the encroachment,the listed company will often improve the level of earnings management to maintain a relatively stable stock price and ensure that the controlling shareholder does not transfer the right of control.Regarding the impact of the problems caused by the controlling shareholder’s equity pledge,this article conducts research from four perspectives: listed companies,medium and small shareholder,pledge holders and financial markets.It is believed that the problems caused by the high-proportion equity pledge of controlling shareholders will reduce the continuous operation ability of listed companies,harm the interests of small and medium shareholders and pledge holders,and will also be detrimental to the healthy and stable development of my country’s financial market.Based on this,this article puts forward several suggestions on how to deal with the problems and adverse effects that may be caused by the pledge of controlling shareholders’ equity.It mainly includes three aspects: improving the corporate governance structure,improving the equity pledge system and strengthening external supervision.