Abstract
The application of big data in enterprise management is more and more common. With the data of A-share listed companies in Shenzhen Stock Exchange from 2014 to 2018, this paper examines the influence of controlling shareholders equity pledge on the quality of information disclosure and the moderating effect of financing constraints in the age of big data. There are two key findings. First, the controlling shareholders will take opportunistic action to reduce the quality of information disclosure so as to maintain the stock price and avoid the loss of control. And the higher the proportion of equity pledged, the stronger the incentive. Second, this phenomenon is influenced by the financing constraints, which means the negative relationship between equity pledge and the quality of information disclosure is more significant in high financing constraint enterprise than in low financing constraint enterprise. The above conclusions provide enlightenment for optimizing enterprise information disclosure in the era of big data.
Highlights
Since the newly amended "Company Law" in 2013 requires that securities companies can undertake the business of equity pledge, it has gradually developed into a very common financing method in China's capital market, which has aroused the attention of lots of scholars
As a financing means that is accepted by major shareholders and the capital market, we should pay more attention to the negative impact of equity pledge compared with its financing advantage of transforming the static equity of major shareholders into dynamic capital [1]
In order to avoid the risk of the transfer of control rights brought about by equity pledge, the controlling shareholders have the motivation to take opportunistic actions to manage the market value and maintain the stock price, which is manifested in the adoption of smoothing earnings, selective use of accounting policies and intervention in information disclosure
Summary
Since the newly amended "Company Law" in 2013 requires that securities companies can undertake the business of equity pledge, it has gradually developed into a very common financing method in China's capital market, which has aroused the attention of lots of scholars. In order to avoid the risk of the transfer of control rights brought about by equity pledge, the controlling shareholders have the motivation to take opportunistic actions to manage the market value and maintain the stock price, which is manifested in the adoption of smoothing earnings, selective use of accounting policies and intervention in information disclosure. When the stock price drops, the negative signal to the market is amplified through the market mechanism, which aggravates the risk of the stock price collapse of the enterprise, and the controlling shareholders will suffer more losses It is a goal for controlling shareholders to take opportunistic action to maintain the stability of stock price after equity pledge. This paper attempts to clarify the relationship between equity pledge and the quality of information disclosure of enterprises.
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