Research On The Influence Of Equity Pledge Of Controlling Shareholders On Inefficient Investment

In recent years,the phenomenon of inefficient capital allocation in many companies has seriously hindered the virtuous cycle and sustainable development of enterprises.As an important financing method,the equity pledge of the controlling shareholder may cause the controlling shareholder to lose control when the stock price falls because the equity value of the subject matter is highly volatile.The agency conflict will promote the controlling shareholders to adjust the decision-making behavior and objectives and manipulate the stock price,which not only affects the stock price estimation,but also affects the effectiveness of investment decisions.Therefore,the stock price manipulation motive caused by the controlling shareholder’s equity pledge will have a negative impact on the stock price estimation,and the stock price can not reflect the real value,and the stock mispricing is inevitable.The higher the degree of mispricing of stocks,the lower the efficiency of the capital market,which will limit the source of funds for enterprises,and is very unfavorable to the investment activities of companies.To this end,this paper discusses the equity pledge behavior of the controlling shareholders of listed companies in China,hoping to provide a new reference direction for enterprises to alleviate the inefficient investment.Since 2013,when the equity pledge method was put into trial use,the scale of this business has expanded rapidly.Therefore,this paper takes the relevant data of all A-share listed companies from 2014 to 2021 as samples to study the impact of equity pledge of controlling shareholders on inefficient investment and the intermediary role of stock mispricing between them.And further explore the controlling shareholder pledge pressure on the relationship of regulation.The findings are as follows:(1)Equity pledge of controlling shareholders will significantly increase the inefficient investment of listed companies.(2)Equity pledge of controlling shareholders can increase the degree of overvaluation of stock prices,but has no effect on the degree of undervaluation.(3)Equity pledge of controlling shareholders intensifies inefficient investment by increasing the overvaluation of stock prices.(4)Greater pledge pressure can inhibit the inefficient investment caused by equity pledge of controlling shareholders.According to the research conclusions,the paper puts forward policy suggestions from three aspects: strengthening the supervision of the controlling shareholder’s equity pledge behavior,optimizing the internal governance environment and improving the pricing system of the capital market,so as to effectively prevent the risk of the controlling shareholder’s equity pledge,reduce the inefficient investment behavior,and make the equity pledge financing method give full play to its advantages and realize the incentive role of enterprise operation.