Research On The Influence Of Controlling Shareholder’s Equity Pledge On Dividend Policy

Equity pledge refers to a financing method in which shareholders of listed companies pledge their shares to other financial institutions to obtain funds.Because equity pledge has the characteristics of low cost and fast financing,it has attracted widespread attention and is widespread in the A-share market.More than half of listed companies have equity pledges,and the pledge ratio is not low,and there are even 100% pledges by shareholders.It is undeniable that equity pledge can effectively alleviate the financing difficulties of listed companies and solve the shortage of funds under the premise of ensuring control.However,its shortcomings cannot be ignored.The equity pledge will deepen the effect of the controlling shareholder’s interest encroachment,and face the risk of control transfer when the stock price drops.As an important financial policy,dividend policy is also an important source of investors’ attention and gains.What kind of dividend distribution policy the listed company will choose after equity pledge has become the main research object of this article.Therefore,this paper selects 2015-2020 A-share listed companies as data samples to study the relationship between equity pledge and dividend policy,propose hypotheses through theoretical analysis,establish models for regression analysis,and draw conclusions.At the same time,related party transactions and external audit quality are added as adjustment variables to study whether related party transactions and external audit will affect the relationship between equity pledge and dividend policy,and finally make relevant recommendations.After research,the following conclusions are drawn:(1)A listed company with controlling shareholder equity pledge will reduce cash dividends and increase stock dividends.The higher the equity pledge ratio,the less cash dividends will be paid,and the more stock dividends will be distributed.This means that listed companies after equity pledges will be more willing to choose stock dividends rather than cash dividends as the dividend distribution policy of the year.(2)Related party transactions have intensified the negative relationship between equity pledge and cash dividend,and eased the positive relationship between equity pledge and dividend policy.This is because after the controlling shareholder’s equity pledge is motivated by interest encroachment,the cash dividend will be reduced and the cash will be kept in the listed company for the controlling shareholder to use.At the same time,stock dividends such as transfers,as one of the ways of benefit transmission,will be relatively reduced after related transactions.(3)High external audit quality helps to alleviate the negative relationship between equity pledge and cash dividends.The hiring of the four major international accounting firms as external audit institutions is an effective external supervision and is conducive to supervising the encroachment of controlling shareholders’ interests.This paper studies the equity pledge,dividend policy,related party transactions,and external audit quality together,analyzes the role of related party transactions,external audit quality on the relationship between equity pledge and dividend policy,and further enriches and perfects the content of equity pledge and dividend policy.Based on this conclusion,we should strengthen the supervision of equity pledges,improve the dividend policy,strengthen the supervision of external institutions,and increase investor education and protection.