Share Pledging and Financial Constraints in China

Cheng, Zijian; Liu, Zhangxin; Sun, Yupu

doi:10.2139/ssrn.3536042

Cited by 1 publication

(1 citation statement)

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“…According to the recent research results, Luo Jinhui et al (2020) tested the impact of the length of the annual report on the equity capital cost of listed companies, believing that the longer the annual report, the lower the equity capital cost of listed companies and this effect of reduction is stronger in non-stateowned enterprises and companies not audited by the 'big four '. Sun Tong et al (2021) also believed that the posting, commenting, and forwarding number of Microblog texts by the entrepreneur would affect the enterprise's equity capital cost (Sahiti and Smith, 2017;Cheng et al, 2021). The more the posting, commenting, and forwarding, the lower the enterprise's equity capital cost.…”

Section: Equity Capital Costmentioning

confidence: 99%

Controlling Shareholder Pledges and Cost of Equity Capital: Analyzing Empirical Evidence from A-share Listed Companies

Guo

Huang

Yang

et al. 2022

Preprint

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With the constant increase in China’s stock pledge transactions, controlling shareholders’ equity pledges may result in inadequate investment, which government regulatory authorities, investors, and financial management departments should be aware of. Taking China’s A-share listed companies from 2013 to 2019 as a sample, this paper examines the impact of controlling shareholder pledge on equity capital cost. It is found that the equity capital cost of listed companies increases significantly after controlling shareholder pledge, and high-quality audit reports help reduce the influence of controlling shareholder pledge on it. In addition, the mechanism test shows that controlling shareholder pledge impacts the equity capital cost by reducing stock liquidity and increasing the tunneling behavior of large shareholders. Further research shows that under controlling shareholder pledges, improving the quality of information disclosure can help reduce the equity capital cost, while stock price risk can increase the equity capital cost.

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Section: Equity Capital Costmentioning

confidence: 99%