Abstract
The synchronization of stock price is an important index to measure the information of stock price. Compared with the countries with mature capital market, the synchronization of stock price in China is on the high side, and the fluctuation of stock price often presents the phenomenon of “rising and falling together”. This paper studies the impact of pledge of major shareholders’ equity on the synchronization of stock price, and further explores the role of information disclosure quality. Based on the data of China’s A-share listed companies in 2013-2019, the empirical study shows that: there is a large shareholder equity pledge in enterprises, and the synchronization of stock price is higher, and with the increase of the proportion of large shareholder equity pledge, the impact is more significant; the quality of information disclosure plays a significant negative role in the relationship between the synchronization of large shareholder equity pledge and stock price, easing the impact of large shareholder equity pledge the impact on stock price synchronization.
Highlights
Equity pledge refers to the behavior that the shareholders of an enterprise pledge their equity to the bank to obtain loans
The possible contributions of this paper are as follows: first, the previous research mainly focused on the stock price crash, and this paper mainly expanded the research of large shareholders' equity pledge from the perspective of stock price synchronization
When the equity value drops below the loan amount obtained by pledge financing, major shareholders can choose to give up this part of equity and transfer the depreciated equity to financial institutions such as creditor bank
Summary
Equity pledge refers to the behavior that the shareholders of an enterprise pledge their equity to the bank to obtain loans. The pledge of stock right is the financing behavior of shareholders themselves, the controlling position of large shareholders will bring great influence to the decision-making of enterprises. According to the system of stock pledge, when the stock price of an enterprise falls to the closing line of pledge, the pledgee has the right to close the position of the Pledged Shares, which may lead to the control crisis of the company. The existing research on equity pledge mainly focuses on the stock price crash, earnings management[1], and has not yet examined the impact of large shareholder equity pledge from the perspective of share price synchronization. The possible contributions of this paper are as follows: first, the previous research mainly focused on the stock price crash, and this paper mainly expanded the research of large shareholders' equity pledge from the perspective of stock price synchronization. The paper calculates the quality of information disclosure from the perspective of investors, and more comprehensively expands the factors that affect the synchronization of stock price
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