Research On The Impact Of Controlling Shareholders’ Equity Pledge On Financial Risk Of Listed Enterprises In China

Equity pledge can greatly restore the interests of controlling shareholders and provide funds for them.This flexible method is highly sought after by controlling shareholders.In recent years,controlling shareholders often use equity pledge to obtain financing.However,with the drastic changes of the stock market and the tightening of the financing environment in 2018,a huge equity pledge explosion crisis broke out in China’s financial market.Such economic consequences not only bring financial risks to controlling shareholders and listed companies,but also diffuse financial risks if they happen within the company group.Financial risk will also spread to other companies in the group through the inseparable links between companies,exposing them to different levels of financial risk.The analysis model was established,Empirical analysis method is used to analyze the mechanism of controlling shareholder’s equity pledge on the company’s financial risk,according to the Z-Score analysis model developed by Altman to measure the financial risk.Compared with a single index,the measurement of financial risk is more detailed and scientific.On this basis,taking into account the specific national conditions of China.The study found that the controlling shareholder equity pledge and the financial risk of the listed companies have significant positive influence,in regulating effect analysis,when the proportion of equity management have larger,the controlling shareholder’s equity pledge for listed companies financial risk level has obvious positive influence,compared with the state holding listed companies,Equity pledge by controlling shareholders of non-state holding listed companies has a strong positive impact on financial risk.This paper discusses the influence of controlling shareholder’s equity pledge on the company’s financial risk.