Shares Pledge Of Controlling Shareholder&Corporate Charitable Donation

In 2015,shares pledge exploded on China’s capital market like a hidden “landmine”.The controlling shareholders avoided the risk of transfer of control caused by equity pledges by suspending their trading to protect the market.A large number of self-insurance behaviors seriously affected the liquidity of the capital market at that time,resulting in heavy losses for many investors.Since then,shares pledge has been widely concerned by scholars and the market.As a financing instrument with the advantages of low cost,low threshold and simple procedures,shares pledge,once licensed,was quickly sought after by listed companies and became one of the most popular financing instruments in the current capital market in China.However,the phenomenon of “shares pledge disorderly” also emerges one after another,which brings a lot of risks to investors.In the process of shares pledge,in order to avoid the risk of transfer of control,the controlling shareholders may whitewash the company’s performance and stabilize the company’s stock price and investor sentiment through market value management.And carrying out public welfare charity donation is an effective means of market capitalization management.Charitable donation,as a public welfare and free social behavior,can not only reflect the social responsibility of the donating enterprise,but also improve the social status and public image of the enterprise.Enterprises still make charitable donations after shares pledge,which can send a signal to the capital market that their funds are in good condition to a certain extent,thereby covering up the adverse effects of shares pledge and boosting investor confidence.Based on this background,this paper studies the impact of controlling shareholder shares pledge on corporate charitable donations,and introduces analyst tracking and institutional investors to explore the impact of them on the relationship between controlling shareholder equity pledge and charitable donations.Firstly,this paper systematically reviews the relevant literature,combines information asymmetry theory,principal-agent theory,signaling theory and charitable donation theory,infers the relationship between variables,and puts forward research hypotheses.Secondly,taking A-share listed companies from 2010 to 2019 as samples,this paper designs 3models to empirically test the relationship between shares pledge and charitable donation of controlling shareholders,as well as the role of analyst tracking and institutional investors between them,and further discusses the nature of property rights,agency conflict and the mechanism of overconfidence.Finally,through the research conclusions,the corresponding suggestions are put forward.As a result of the research in this paper,the following main conclusions were drawn.(1)The listed companies with shares pledge by the controlling shareholder have a higher level of charitable donation.(2)Analyst tracking plays a positive role in regulating the relationship between controlling shareholder shares pledge and charitable giving.The increase in the number of analysts will improve the information transparency of enterprises,thus prompting the controlling shareholders to postpone more charitable donations.(3)Institutional investors also have a positive effect on the relationship between controlling shareholders’ equity pledges and charitable giving.The higher the shareholding ratio of institutional investors,the stronger the supervision over the enterprise,and the controlling shareholders are more likely to use hidden charitable donations to cover up negative information.(4)In further analysis,compared with state-owned enterprises,the controlling shareholders of non-state-owned enterprises are more likely to expand the scale of charitable donations in shares pledge;Agency conflict weakens the positive correlation between controlling shareholder’s equity pledge and charitable donation;Management overconfidence also weaken the positive correlation between shares pledge and charitable giving.The main contributions of the research in this paper are as follows.(1)To study whether the pledging of controlling shareholders’ equity has an impact on corporate donation behavior from the perspective of corporate social responsibility,which enriches and expands the research on the economic consequences of pledging of controlling shareholders’ equity.(2)Analyzing whether charitable giving increases significantly after controlling shareholders’ equity pledges are implemented from the viewpoint of controlling shareholders’ equity pledges,providing a new entry point for the theoretical explanation of strategic motives for charitable giving.(3)Taking analyst tracking and institutional investors as regulatory variables,this paper explores the influence path between shares pledge and charitable donation of controlling shareholders,which expands the relevant research on external supervision and governance mechanism to some extent.