Research On The Impact Of Controlling Shareholder’s Equity Pledge On Corporate Investment Structure

Equity pledge has already become a standardized financing method.Due to its simple process and no change in control rights,this financing method is favored by major shareholders of various enterprises.Recently,along with the GDP growth slowed,our country’s real economy has gradually emerged from the real to the virtual.The tendency of enterprises to increase the allocation of financial assets and reduce industrial investment has appeared.The phenomenon of enterprise’s investment financialization will have an adverse influence on industrial investment,which will produce a certain amount of industrial investment crowding out.Since the controlling shareholder may face the risk of loss of control rights after the equity pledge,he has the intention to intervene in the company’s decision.Moreover,the separation of the two rights caused by the pledge may intensify the "hollowing out" intention of the controlling shareholders,who are motivated to change the investment decisions of enterprises to realize their own private interests.This article chooses the data of Shanghai and Shenzhen A-share non-financial enterprises from 2011 to2020 to explore the impact of the controlling shareholder’s pledge behavior on the enterprise’s investment structure.The study found that:(1)In the benchmark regression,the controlling shareholder’s pledge behavior will significantly reduce the level of the enterprise’s industrial investment,and its pledge ratio has an obviously negative relation with the level of industrial investment;while its pledge behavior will significantly improve the level of financial investment,and its pledge ratio has a significant positive correlation with the proportion of financial investment;(2)In the heterogeneity test,it is found that when the sample is a group with a high shareholding ratio of the controlling shareholder,or when share market cycle is in a bear market,or when the sample is the private enterprise group,the effect of the pledge on reducing the proportion of industrial investment and increasing financial investment is more significant;(3)Through the mechanism test,it is found that financing constraints play a partial intermediary role between them;(4)After distinguishing the investment direction of the pledged funds,it is found that if the controlling shareholder invests the funds in the enterprise,it will increase the level of industrial investment and reduce the level of financial investment of the enterprise.This paper enriches the exploration on economic consequences of the controlling shareholder’s equity pledge.In general,the controlling shareholder’s pledge will make the investment structure of the enterprise more financialized,which may lead to the development of the company "from the real to the virtual".Corresponding policy recommendations are put forward.