Motivation And Market Effect Of Major Shareholders’ Increase In Shareholding Under Equity Pledge

In recent years,with the support of national policies,it is increasingly common for major shareholders to influence stock prices by increasing their holdings.Major shareholders of enterprises can directly access the internal information of enterprises,and have a great information advantage over investors in the secondary market.In the context of such information gap,investors used to regard the performance of major shareholders in the market as an important reference standard for investment decisions.The increase of major shareholders has been as good news to convey to the market.Some large shareholders do increase their holdings based on the financial incentive of a company’s future share price rise.However,some major shareholders take advantage of information to convey good news of the company to the market under the guise of increasing their holdings,while the real motive of increasing their holdings is to seek personal gains.The research first sorts out and analyzes the literature and the mechanism of action from two aspects: one is the motivation of major shareholders to increase their holdings under the background of equity pledge,in addition to the traditional financial motivation,it also includes the motivation to alleviate the pledge risk;the second is to analyze the motivation under different motivations.The market reaction of major shareholders increasing their holdings.Secondly,combined with the research purpose of the paper,the listed companies with equity pledges in Shanghai and Shenzhen A shares from 2010 to2020 are selected as samples.The research establishes a model with the increase of shares held by major shareholders and short-term and long-term market effect variables as dependent variables,and equity pledge and pledge early warning pressure as independent variables.Finally,the propensity score matching method and the instrumental variable method are used to test.The results show that :(1)the major shareholders of equity pledge enterprises are more inclined to increase their holdings in the secondary market,and the higher the proportion of pledge,the more obvious the tendency to increase their holdings.(2)In addition to financial motivation,the reasons for equity pledge enterprises to increase their holdings of major shareholders also include the motivation to alleviate the risk of pledge when there is early warning pressure.(3)In the short term,no matter what motivation the major shareholders of the pledge enterprise increase their holdings based on,they can have a positive market effect in the short term,and this effect has no significant difference between the early-warning pressure group and the no-warning pressure group.(4)In the long run,the market effect of the increase of major shareholders of pledge enterprises is affected by the motivation of increase: when there is no early warning pressure,the motivation to increase holdings is financial motivation,and the increase of large shareholders has a long-term positive effect.When the enterprise has early warning pressure,the motivation to increase the holding is to alleviate the risk of pledge.Although the short-term market effect is positive,the long-term market effect will be reversed.This result not only helps to deepen investors’ interpretation of major shareholders’ increase in holdings,but also for equity pledge companies,through the study of the market effect of major shareholders’ increase in holdings,it is beneficial for enterprises to carry out risk management and control,and then from regulatory authorities,listing Suggestions are given from three perspectives of companies and investors.The regulatory authorities should improve the regulatory mechanism and actively play the role of the major shareholders’ increasing their holdings as a bridge between investors and enterprises.The major shareholders of listed companies should make reasonable use of the information disclosure mechanism and attach importance to the management of their relationship with investors.Investors should treat the signals sent by the behaviors of enterprises and major shareholders rationally and construct reasonable investment strategies.