Research On The Risk Of Equity Pledge Of Major Shareholders In My Country's Retail Industr

In recent years,equity mortgage has rapidly become one of the most popular financing channels for enterprises because of its many advantages such as high efficiency and easy procedures.However,in the process of development,the risks behind it have been rising.Starting from 2017,the frequent incidents of default and share price plunge of listed companies have cast a shadow over the emerging equity pledge market,and the risks of equity pledges and their negative impact on enterprises are becoming increasingly evident.The retail industry,as part of the capital market,has developed differently from other industries,featuring low profits,weak self-employment,low proportion of fixed assets to total assets,high corporate cash flow pressure,frequent corporate cash shortages,and difficulties in corporate financing.Compared with other industries,most of the companies in the industry are financed by equity financing channels,of which equity financing accounts for a relatively large proportion.Most companies frequently rely on equity pledging activities to obtain working capital in order to maintain their daily required production and operation.When listed companies in the retail industry engage in equity pledge financing,the market value pledged is generally large and the percentage of controlling shareholders’ equity pledges is relatively high.Listed companies in the industry have become quite dependent on equity pledges and the risk of pledging is high.Therefore,it is necessary to analyze and prevent the risk of equity pledges in the retail industry.In this context,based on the review of previous equity pledge literature and the study of risk control theories,this paper takes the capital needs,financing difficulties,and pledge status of the retail protection industry as the starting point,take the *ST Tesco as the case,studies its pledge process,annual reports and bulletin,and find that there are many risk points.this paper evaluates the market risk,control transfer risk and financial risk with the help of event study method,Z-score model and financial index analysis.It is found that:First,pledges trigger poorer market reactions,exacerbate abnormal stock price volatility,cause stock price plunges and carry greater market risk.Second,The continued decline in stock prices leads to default of pledged shares,with a consequent transfer of control of major shareholders.Finally,After frequent equity pledges,the company’s financial expenses surge,its liquidity gradually decreases and the scale of debt continues to expand.The pledges of equity aggravate the financial risk and put the company in a vicious circle.At last,based on the failure case of *ST Tesco share pledge,this paper puts forward targeted improvement suggestions for the company,hoping to provide reference experience for other relevant enterprises in the industry and promote the benign development of the market.