Research On The Impact Of Controlling Shareholders' Equity Pledge On Inefficient Investment Of Listed Companie

As a financing method,equity pledge has become one of the most used financing methods in the market due to its advantages of simple process,fast speed and low cost.Investment is very important for the development of a company.Inefficient investment will not only affect corporate value and corporate development,but also affect shareholders’ interests.In the listed companies,since the controlling shareholder can dominate the company’s operation,and the minority shareholders generally cannot directly supervise the controlling shareholder in the market,so the equity pledge is closely related to the company’s operation although it is the controlling shareholder’s personal financing behavior.The controlling shareholder’s encroachment on the company’s interests after equity pledge,the use of abnormal means to maintain the stability of the company’s stock price,and the rise of the company’s financing cost after equity pledge may lead to inefficient investment of the company.These situations may affect the development of the company and the interests of shareholders.As the internal and external governance methods of the company,the exit threat of non-controlling major shareholders and external audit have a supervisory effect on the company and the controlling shareholders,which may have an impact on the behavior of the controlling shareholders after equity pledge.Therefore,from the perspective of inefficient investment of listed companies,this paper explores the impact of controlling shareholders’ equity pledge on inefficient investment of listed companies,and considers the moderating effect of non-controlling major shareholders’ exit threat and external audit supervision.This paper first sorts out the relevant literature on equity pledge,inefficient investment,noncontrolling major shareholder exit threat and external audit supervision Then,based on the theoretical basis,this paper makes some hypotheses about the impact of controlling shareholder’s equity pledge on inefficient investment,the moderating effect of non-controlling major shareholder’s exit threat and the moderating effect of external audit supervision.Empirical analysis is also used to test the hypotheses.In the part of positive analysis,this paper selects the data of Ashare listed companies in Shanghai and Shenzhen Stock exchanges from 2009 to 2021,discusses the research on the impact of controlling shareholder’s equity pledge on the inefficient investment of listed companies,and explores the moderating role of non-controlling major shareholders’ exit threat and external audit supervision.In the end,this paper analyzes the heterogeneity according to the different ownership nature of listed companies.After analysis,this paper draws the following conclusions:(1)The pledge of controlling shareholders’ equity will increase the degree of inefficient investment of listed companies.(2)The exit threat of non-controlling major shareholders can inhibit the impact of equity pledge of controlling shareholders on inefficient investment.(3)High-quality external audit can significantly inhibit the impact of controlling shareholders’ equity pledge on inefficient investment.(4)The impact of controlling shareholder’s equity pledge on inefficient investment is more obvious in nonsoes.Then,according to the results of empirical analysis,this paper puts forward policy recommendations from the perspectives of improving the degree of information disclosure,establishing a risk assessment system,perfecting the governance mechanism of non-controlling major shareholders,developing external audit and improving audit quality.Finally,this paper looks forward to the next research.