Equity Pledge Of Controlling Shareholders,Internal Control And Financial Restatement

Under the background of the continuous development and improvement of China’s capital market,the current ways that market participants obtain funds are constantly updating and changing,and financing methods adapt to the current market conditions,among which equity pledge has gradually become a financing method favored by shareholders of listed companies.Equity pledge melt is shareholders will hold their equity to bank financial institutions such as pledge,to get money,because the equity as the pledge subject matter,financial institutions according to the price can convenient measure value,more transparent,shareholders can also quickly get money,meet the demand of funds,so it is a convenient way of financing.As equity pledge gradually into the public view,the related problems also gradually exposed,especially in recent years for equity pledge of listed companies "thunder" events happen,cause share price crash,lead to creditors and small and medium-sized investors suffered losses,disrupted the market order,regulatory attention.At present,the academic attention on the equity pledge is also increasing.Based on the basis of previous studies,this paper focuses on exploring the relationship between the equity pledge of the controlling shareholder of the listed company and the financial restatement,and verifies the mechanism of the financial restatement caused by the equity pledge of the controlling shareholder,that is,the intermediary role of internal control.It makes up for and improves the research on the economic consequences of equity pledge,and can provide reference for the relevant regulatory authorities to improve the supervision system,so as to standardize the behavior of listed companies and improve the quality of accounting information disclosed.Enhance the supervision and restraint role of the enterprise internal control system.Combining the classical theory and the latest research results,this paper uses all A-share listed companies as the research sample,selects the data from 2009 to 2020,and eliminates the data that does not meet the conditions.The Logit regression model was used to test the relationship between the equity pledge of controlling shareholders and the financial restatement,and the three-step method was used to verify the intermediary role of internal control.In further research,from the perspective of external audit quality analyzes the equity pledge behavior on financial restatement mechanism,and further verify the different external audit internal control quality intermediary role,found that high quality external audit to internal control failure,can restrain the controlling shareholder equity pledge lead to the occurrence of financial restatement.In addition,the robustness test is also conducted.In order to control the endogeneity problem,the instrumental variable method and the double difference method are used.propensity score matching method,propensity score matching method plus double difference method were tested.Finally,this paper believes that the equity pledge of controlling shareholders is more likely to lead to the financial restatement,among which the internal control plays an intermediary role,and the controlling shareholders of equity pledge achieve the purpose of manipulating accounting information disclosure and earnings management by reducing the internal control,and eventually leads to the financial restatement.Further tests proved the compensatory effect of high quality external audit to the lack of in internal control.