Research On The Motivation Of Equity Pledge And Its Economic Consequences

Equity pledge has the advantages of fewer restrictions and is easy to process.It is a common financing method for listed companies.Equity pledges can transform static equity into dynamic available capital,timely help shareholders to integrate funds,and solve financing problems.However,with the common application of equity pledge financing,the risks brought by pledges are gradually exposed.High frequency and a high proportion of pledges are often accompanied by certain risks,which will intensify the separation of the two rights and facilitate shareholders to carry out benefit embezzlement.This behavior will not only damage the value of the enterprise and make the stock price of the enterprise continue to decline but also bring the risk of control transfer after liquidation.Case analysis based on Guangzhou Yuetai Group.Based on the review of relevant literature and theories,introduces the general of this company and the current situation of equity pledges,digs deeper into the motives of shareholders’ equity pledges from three perspectives: relieving the capital difficulties of listed companies,meeting shareholders’ own financing needs,revitalizing restricted shares and reducing risks.It also uses various financial indicators and analytical models to analyze the impact of equity pledges from the perspective of listed companies,minority shareholders,pledging shareholders and pledgees,and creditors.This case study found that shareholders’ high percentage of pledges affects companies in four main ways: deepening the degree of separation of powers,frequent changes in senior personnel,information disclosure violations,and increased risk of misappropriation of interests.The pledging of equity interests by the shareholders of Guangzhou Yuetai Group has not only produced negative market effects,increased financial risks,reduced the level of corporate performance and corporate value,adversely affected the shareholders themselves,but also seriously harmed the interests of minority shareholders,creditors and pledgees.In response to the results of the case study,reference suggestions are made at six levels: listed companies,pledging shareholders,minority shareholders,pledgees,creditors,and external regulation.It is hoped that the pledge behavior of shareholders can be effectively restrained and the risk brought by its behavior can be reduced.