Equity Pledge,Internal Control And Enterprise Financialization

Equity pledge has become a "sharp weapon" for shareholders to obtain financing.Because of its advantages of simple operation and unchanged voting rights,it has become the preferred choice of major shareholders of listed companies.In recent years,with the slowing down of China’s economic growth rate,the real sector has gradually produced a trend from reality to reality.The asset structure of real enterprises tends to be financial,and the proportion of real investment continues to decline.Such trends will crowd out industrial investment resources,and have a negative impact on the long-term development of real enterprises.After equity pledge,the controlling shareholders may lose control,so they have the motivation to intervene in the investment decisions of enterprises to stabilize the stock price and reduce the risk of control transfer;Financing constraints play a part of intermediary role in equity pledge and enterprise financialization.In addition,the separation of control rights and cash flow rights caused by pledge will strengthen the "tunneling" motivation of controlling shareholders,making them more intent to influence the investment structure of enterprises to obtain private benefits of control rights.The main contributions of this paper are as follows: First,based on the real data,provide direct evidence for the research on the relationship between equity pledge and corporate financialization,reveal the current situation and internal causes of the problems of listed companies’ financialization in China,help the regulatory authorities do a good job in the supervision and management of equity pledge business,implement the direction of pledge funds,and promote the coordinated development of finance and the real economy.Second,from the internal perspective of enterprises,the relationship between equity pledge,internal control and enterprise financialization is investigated,which provides a practical basis for promoting the establishment of high-quality internal control mechanism of enterprises,helping controlling shareholders make rational financial asset investment decisions based on the current situation of enterprises,and exploring effective ways to standardize the level of enterprise financialization.It provides a reliable theoretical basis for strengthening financial services to the real economy,expands the research ideas on internal control and enterprise financialization,enriches the relevant theories on the motivation of enterprise financialization,and helps enterprises improve the internal supervision mechanism and realize their long-term development.The innovation of this paper is as follows: First,starting from the behavior of the controlling shareholders,this paper examines the impact of their equity pledge on corporate finance,and specifically examines the differences of research conclusions under different backgrounds.Second,introduce the internal control as the internal supervision mechanism of enterprises,explore the impact of internal control on the enterprise’s financialization,and then test the regulatory role of internal control in the relationship between the shareholding pledge of controlling shareholders and the enterprise’s financialization,which enriches the research of internal control mechanism.