The Research On The Economic Consequences Of The Shares Pledge Of Controlling Shareholders On Stock Price Crash Risk

Shares pledge is a financing method in which the pledgor uses its equity as the pledge object to raise funds from the pledgee(financial institution,etc.).The pledgor does not need to transfer the equity held to the pledgee,but pledges the property rights of the equity to the other party in exchange for funds.The pledgor still retains the control and management rights of the listed company.However,if the shareholder cannot pay off the debt on time,the financial institution as the pledgee has the right to sell the pledged shares to recover the principal and interest of the debt.With the standardization of the pledge process and the simplification of procedures,the shares pledge business has developed rapidly,and the controlling shareholders have become the main group of shares pledge financing.Under normal circumstances,shares pledge is a financing channel to alleviate the company’s shortterm capital shortage.However,some controlling shareholders have abused shares pledge to pursue private interests,which has brought great damage to minority shareholders and the capital market.In recent years,most of the stock price collapses(collapses)have the problem of controlling shareholders’ shares pledge.What is the internal relationship between the two?The capital market in China having been launched at a later date,investors generally lack rational investment concepts and methods,and tend to be more emotional,chasing the rise and killing the fall,which to some extent raises the crash risk.As a " rapier ",the shares pledge of controlling shareholders affects the sensitive nerves of investors and affects their emotions.To what extent does investor sentiment influence the correlation between the pledge of controlling shareholders and the danger of a crash? Investor sentiment can be divided into optimism and pessimism.Is the impact of investor heterogeneity on the relationship between the two symmetrical?It is of great theoretical and practical significance for corporate decisionmakers,external investors and regulatory innovation to clarify the impact of shares pledge of controlling shareholders on the crash risk and the role of investor heterogeneity in the two.From 2007 to 2021 Shanghai and Shenzhen A-share listed companies are chosen as the research object for this paper,which employs a combination of literature research and empirical analysis to analyze the influence of controlling shareholders’ shares pledge on crash risk from the viewpoint of investor diversity.This paper’s research results demonstrate that:(1)Under the condition that the relevant control variables remain unchanged in this article,controlling shareholders’ shares pledge will heighten the crash risk of listed companies in the future,and the higher the pledge ratio,the more pronounced the crash risk.(2)The crash risk of stock price is significantly enhanced by the overall investor sentiment level.(3)Amidst the buoyant investor outlook,the crash risk after the pledge of controlling shareholders is significant;During the period of pessimism,the relationship between the two is not significant.(4)Research further indicates that,due to the rise in the proportion of equity pledges from controlling shareholders,smaller companies are more vulnerable to stock price collapse;conversely,larger companies are more resilient to such a risk.In comparison to prior research,this paper’s potential contributions are as follows:First,no consistent conclusion has been reached by the present study as to whether the pledges of control shareholders have a beneficial or detrimental effect on the crash risk of stock price.By utilizing the most current sample data,this paper furnishes empirical research with the most up-to-date proof for the discourse on this matter.Second,investigating the influence of the shares pledge of controlling shareholders on crash risk,prior studies have mainly been founded on the concept of information asymmetry,research combining behavioral finance theory is rare.Incorporating investor sentiment variables into behavioral finance,this paper offers a beneficial addition to the current research.Thirdly,this study classifies investor sentiment into optimism and pessimism,and finds for the first time that heterogeneous investor sentiment has an asymmetrical effect on the crash risk in shares pledge of controlling shareholders.