The Influence Of Controlling Shareholder’s Equity Pledge On Enterprise Financing Cost

As a new financing mode,equity pledge is popular with financial market because of its simple operation,fast speed of capital acquisition and low cost.In recent years,the appearance of equity pledge in the A-share market is hot.According to the statistics of Oriental Fortune Network,by the end of 2021,2,517 listed companies were pledged in A shares,accounting for almost more than 50% of all listed companies;the total value of pledged shares accounted for about 5% of the total market value of A shares,and the specific amount is 4.18 trillion yuan.Among them,314 companies’ equity pledge ratio reached 80%,and the equity pledge ratio was obviously too high.And the controlling shareholder equity pledge although is controlling shareholders’ personal behavior,but due to the particularity of the controlling shareholder,the certain control effect of company,and stock price has certain volatility,once the stock price fell below the flat line,will be forced to liquidation,cause control transfer,so that the actual controller of the company will change.This will effect company’s operating efficiency,transmitting adverse signals related to the company to investors.So,creditors and minority shareholders after the enterprise equity pledge about enterprise financial,management,information risk expected will increase,and creditors and minority shareholders will require higher risk premium namely financing cost to risk compensation,equity in corporate governance mechanism and accounting information transparency and the relationship between the two regulation effect,this is the key issue of the analysis in this paper.This paper selects A-share listed companies in 2007-2020 as the main research sample,and focuses on the relationship between equity pledge and enterprise financing cost,equity balance and accounting information transparency,the two corporate governance mechanisms on the relationship and the intermediary effect of major shareholders.Through empirical means such as multiple regression in fixed industries and years,it is found that:(1)listed companies with equity pledge of controlling shareholders will bear higher financing costs.(2)When the listed company has a high degree of equity balance,other shareholders’ shareholders form the behavior of interest groups restricting the controlling shareholders,so as to reduce the hollowing behavior of the controlling shareholders by improving the internal governance mechanism and weaken the positive impact of the controlling shareholders on the financing cost of the enterprise.(3)The higher the transparency of accounting information,the more accurate the quality of enterprise accounting information obtained by external investors,which can further reduce the investment risk by reducing the degree of information asymmetry,and then weaken the positive impact of the equity pledge on financing cost.And through further research,make clear the intermediary effect of major shareholders hollowing out.In the robustness test stage,the above conclusions are still valid by replacing the key variables,changing the regression method,propensity score matching method,instrumental variable method and two-stage regression method.In this regard,the following suggestions are put forward:(1)investors should awake to the risk of equity pledge.(2)Enterprises should establish and improve the corporate governance mechanism,strengthen the supervision and restraint on the words and deeds of major shareholders by improving the equity checks and balances,and improve the transparency of information in order to develop the quality of information disclosed.(3)Relevant regulatory authorities shall improve the systems and regulations to further standardize the equity pledge behavior of the controlling shareholders of listed companies.