Abstract
With the continuous development of the capital market, the behavior of the large shareholders in the capital market of listed companies has become more and more common, among which the shareholders’ equity pledge has been widely concerned by the media, investment institutions and investors. Large shareholders’ equity pledge changes their portfolio risks, and the risk of their shareholders’ portfolio will affect the corporate risk-taking and performance at the same time. Therefore, it is necessary to study the mechanism of the impact of major shareholders’ equity pledge on corporate risk-taking and performance, so as to expand the research perspective of the impact of major shareholders’ characteristics on corporate risk-taking. In order to achieve this goal, this paper studies the impact of large shareholders’ equity pledge on corporate risk-taking and corporate performance by taking the data of Shanghai and Shenzhen A-share listed companies from 2010 to 2017 as samples. The findings of this study are as follows: 1) The pledge of large shareholders’ equity increases the risk-taking of enterprises, which has a negative impact on the performance of enterprises; 2) The pledge of equity for different purposes will bring different economic consequences, that is, the investment of pledged capital in enterprises can improve the risk-taking of enterprises better than that in enterprises outside, and has a more significant negative impact on enterprise performance.
Highlights
IntroductionThis paper is different from the existing studies on the static characteristics of large shareholders, such as the nature of large shareholders
The findings of this study are as follows: 1) The pledge of large shareholders’ equity increases the risk-taking of enterprises, which has a negative impact on the performance of enterprises; 2) The pledge of equity for different purposes will bring different economic consequences, that is, the investment of pledged capital in enterprises can improve the risk-taking of enterprises better than that in enterprises outside, and has a more significant negative impact on enterprise performance
Based on the research of scholars at home and abroad and combined with China’s unique economic environment and institutional background, this paper examines the relationship between equity pledge and corporate risk-taking and performance using the data of A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2010 to 2017, and finds that equity pledge improves the level of corporate risk-taking and reduces corporate performance according to Principal-Agent Theory, Control Benefit Theory and Portfolio Theory
Summary
This paper is different from the existing studies on the static characteristics of large shareholders, such as the nature of large shareholders It examines the impact of large shareholders’ equity pledge behavior on corporate risk-taking from the perspective of dynamic portfolio adjustment by large shareholders. The third part is “research hypothesis”, through a brief overview of the theory, combines with the existing theory to explore the equity pledge and risk-taking, and further derive its impact on corporate performance, putting forward the hypothesis of this paper. Through the summary and analysis of the research results, the conclusion of the article is drawn, and according to the conclusion, appropriate suggestions are put forward to standardize the pledge of large shares, to determine the mechanism of the level of risk-taking and to improve the performance of the company
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