Research On The Impact Of The Major Shareholders’ Equity Pledge On The Cost Of Debt Financing In Real Estate Listed Companies

Influenced by various restrictive policies in the real estate industry,difficulty financing and expensive financing have become the focus of real estate enterprises,and the outbreak of COVID-19 has further exacerbated the problem.By the end of 2022,the financing growth rate of real estate enterprises recorded negative growth for the first time.In this context,equity pledge has become an important financing method for real estate enterprises due to its small restrictions and convenient procedures.However,can equity pledge effectively solve the problem of expensive financing while solving financing difficulties? In fact,the high proportion of equity pledges will intensify shareholders’ money hoarding and tunneling behavior.When the stock price drops,it may also put a company out of business,which will reduce investors’ expectations,and investors will demand a higher rate of return,thus increasing the company’s debt Financing costs.The real estate industry has jumped to the top of the A-share industry in terms of both the average equity pledge rate and the percentage of companies with equity pledges in the real estate industry.However,scholars pay less attention to the economic consequences caused by the equity pledge behavior of real estate enterprises.Therefore,this paper attempts to explore the impact of equity pledge of real estate enterprises on debt financing costs.This paper takes listed real estate companies from 2014-2022 as the research sample.This paper uses priority-order financing theory,information asymmetry theory and principal-agent theory,and introduces the quadratic term of equity pledge into the regression model to explore the impact of equity pledge on debt financing costs of real estate enterprises.And the degree of financing constraints is also included in the study to analyze its moderating effect on the relationship between equity pledges and debt financing costs.Since the investment behavior,operating behavior and financing behavior of firms are influenced by each other,this paper further explores the intermediary transmission channels of shareholder shelling out and surplus management from two paths: investment activities and operating activities.Finally,this paper analyzes the property rights heterogeneity of major shareholders’ equity pledge in real estate enterprises.The research results that:(1)the pledge ratio of major shareholders in real estate enterprises has a positive U-shaped relationship with debt financing costs.That is,when the pledge ratio is lower than 42.96%,the increase of equity pledge ratio can reduce debt financing costs;when the pledge ratio exceeds 42.96%,the increase of equity pledge ratio will significantly increase debt financing costs.(2)Financing constraints have a significant moderating effect on the relationship between equity pledges and debt financing costs.Specifically,when the equity pledge ratio is low,the increase of financing constraint will slow down the decrease of debt financing costs;when the equity pledge ratio is high,the increase of financing constraint will promote the increase of debt financing costs.(3)In the transmission path,the equity pledge of major shareholders have an impact on debt financing costs by affecting earnings management and shareholder hollowing.(4)The positive U-shaped relationship is more pronounced in non-state real estate firms than in state-owned real estate firms.