Equity Pledge Of Controlling Shareholders And The Risk Of Stock Price Collapse

In the last few years,with the development of equity pledge business,the scale of pledge has been rapidly expanded through the advantages of low threshold and convenient procedures,but also produced a range of issues,for instance,the crisis of forcedcompulsory closing.When the members of the company’s controlling shareholder pledge their shares,outside investors and stakeholders will continue to focus on company’s basic situation,once the negative news about the company appears on the securities market,investors may be dumped stocks for information opaque reasons,lead to share price slump,which in turn makes the controlling shareholder in choose additional collateral or forced to reduce its dilemma.This dissertation trys to response whether the controlling shareholder’s equity will enhance the risk of stock price collapse if he chooses to pledge his equity,and on this basis to discuss whether the controlling shareholder will achieve the purpose of alleviating the risk of stock price collapse through a certain intermediary variable,and further analyze the influence of corporate ownership structure on the intermediary mechanism.Firstly,this article retrospects and combes the exiting literature,on this basis,combining with asymmetry theory and other related theories.And this text makes a qualitative analysis on the relationship between controlling shareholders’ equity pledge,real earnings management and stock price collapse risk.Then,taking a sample of Chinese non-financial listed companies from 2008 to 2019,the relationship between the three is empirically tested by mixed panel regression.Finally,based on the dimension of corporate ownership structure,this paper further empirically analyzes the above relationship and the background of the influence mechanism.The research conclusions of this text are as follows :(1)The pledge of controlling shareholders,may significantly increase the risk of sharp decline in the company’s share price,and this risk may also heighten with the hoist of pledge proportion.(2)After the controlling shareholders choose to pledge their equity for financing,it is more likely that in order to avoid the risk caused by the sharp decline of individual shares in the future,they decide to use real earnings management to adjust the company’s earnings in the current period.Further analysis shows that the controlling shareholders prefer to adopt sales manipulation and production manipulation to adjust profits rather than adjusting earnings through cost manipulation.(3)Real surplus management plays a masking effect in the positive correlation between controlling shareholders’ equity pledge and stock price collapse risk,,and this effect is more significant in companies with low equity concentration and poor internal governance.Taking real earnings management as the starting point,this paper skillfully uses the mesomeric effect model to learn the impact mechanism between controlling shareholders’ equity pledge and individual stock crash risk,which not only widens the research on the impact mechanism between controlling shareholders’ equity pledge and individual stock crash risk,but also provides suggestions for regulators,enterprises and investors respectively.