Influence Of Equity Pledge Of Controlling Shareholders On Enterprise Investment Efficiency

The equity pledge is more convenient and faster than the way to reduce the liquidity of shares and bank loans.It still maintains the original control rights and voting rights after the pledge and has been favored by the majority shareholders in recent years.However,the equity pledge carries risks.The value of the pledged shares fluctuates with the share price and cannot be fully guaranteed when the share price falls below the closing line.If the controlling shareholder cannot provide additional guarantee in time,it will be forced to close the position.The concentration of a large number of shares will cause the share price to go down further,causing shareholders to lose their wealth and,if they lose too many shares,losing control.The "shell resource value" of listed companies in our country and the advantages brought by the controlling rights certainly let the controlling shareholders will not easily surrender their control rights.Therefore,when the controlling shareholders anticipate the possibility of losing their control rights,they have the motivation to use their control rights to "empty" the listed companies for additional pledge guarantee,or to increase the investment that can improve the performance in the short term but is detrimental to the long-term interests of the company,and to hype the stock price to avoid the risk of liquidation.Whether it is the "hollowing out" behavior of the controlling shareholders or the short-term investment hype behavior,it will lead to non-investment efficiency and reduce the effectiveness of resource allocation.The investment activities not only affect the sustainable development of enterprises,but also promote the national economic development.Based on this,this paper will discuss the influence between them and their conduction mechanism.After browsing the relevant research,this paper summarizes its views and makes theoretical analysis,taking free cash flow and class I agency cost as the intermediate variables,and taking the risk of control transfer as the perspective to analyze whether the controlling shareholder will induce inefficient investment after its equity is pledged.First of all,this paper introduces based on the current background,and combs the relevant literature from the related aspects of equity pledge and enterprise investment efficiency,points out the main direction and blind area of the existing research,and then leads to the research perspective of this paper.This paper introduces the relevant theories on which this research is based,makes theoretical analysis and puts forward research assumptions.Subsequently,this paper constructs a model based on research assumptions,selects A-share listed companies from 2009 to2021 as research objects,and uses multiple regression analysis to verify the research assumptions.It also studies whether the influence between them is conducted through free cash flow and agency cost of category I.Further,based on the perspective of control transfer risk,we try to judge the control transfer risk through three indicators:equity checks and balances,stock market prices,and stock price crash events,and explores the moderating effect between them.The findings of this study are as follows:(1)The pledge of controlling shareholder’s equity enhances the inefficient investment of the enterprise,which not only intensifies the over-investment but also worsens the under-investment;(2)The pledge of controlling shareholder’s equity can aggravate the inefficient investment of the enterprise by reducing the free cash flow and increasing the agency cost of category I;(3)High risk of transfer of control can aggravate the impact between the two.Finally,based on the background of the current full-scale implementation of the registration system,this paper puts forward relevant policy recommendations to the enterprises and the government respectively.Compared with previous similar studies,this paper reveals the specific transmission path between the two,supplements the factors of control transfer risk neglected in previous studies,and provides an empirical reference for the regulation of equity pledge system between government and enterprises.