Summary:
In recent years, it has become common in China's capital market for large shareholders to use stock pledging for financing purposes.However, due to market turbulence, large shareholders are facing a pledge crisis, which has become a hot topic in the capital market and has raised concerns about systemic risk.Stock pledging seems to be a financing behavior of shareholders that is unrelated to their companies.However, because shareholders occupy a special position, once the risk of the pledged stocks is high, it will have a significant impact on the company's control, stock price, operating performance, and information disclosure, among other effects.Therefore, in the face of risk, large shareholders are strongly motivated to take measures to stabilize the company's stock price. Some scholars have studied the measures adopted by large shareholders, such as information disclosure manipulation or tax evasion.However, these studies have ignored one important aspect: capital operations.In fact, listed companies have often stabilized their share prices through capital operations. Capital operation refers to the process of adding value to a company through the use of capital market instruments and financial instruments by skillfully operating capital.Capital operations mainly include asset acquisition, equity transfers, asset divestiture, absorption and mergers, debt restructuring, asset replacement, and tender offers.Capital operations are often used by companies, and may be a way for large shareholders to alleviate equity pledge risk.First, in reality, many listed companies suspend trading for long periods due to capital operation uncertainty in attempts to avoid a further decline in their stock price.Second, some studies have shown that capital operations are an effective method for listed companies to increase their excess return.Therefore, we try to answer the following question: when the proportion of large shareholders pledging stocks is high or when the stock price reaches the closing line, will listed companies use capital operations to survive potential risk？ If the answer is yes, how does this affect their capital operations？ Furthermore, what is the mechanism behind large shareholders' use of capital operations to avoid pledge risk？ Based on these questions, we investigate the relationship between stock pledging by large shareholders and capital operations using Chinese A-share listed companies over the 2007-2018 period.The results show that (1) the higher the proportion of stocks pledged, the greater the possibility of capital operations in companies; this relationship is more significant in margin calls and in private listed companies.(2) The mechanism test shows that when the pledge ratio increases, the suspension time after capital operations increases; from the perspective of the effect of stock price promotion, capital operations can improve the stock price and alleviate pledge risk in the short term, but the effect is not significant in the long term.(3) The main types of capital operations in listed companies are equity transfers, asset acquisition, and asset divestiture.Further analysis shows that large shareholders mainly use asset acquisition and asset divestiture to increase the suspension time and use equity transfers to increase the stock price. We contribute to the literature in the following ways.(1) From the perspective of capital operations, we find new evidence that large shareholders influence the behavior of companies.In addition, one of the main contributions of this study is to identify the mechanism of capital operations to alleviate equity pledge risk, that is, large shareholders can alleviate the pledge crisis by influencing the market reaction and the suspension time of capital operations.(2) We expand relevant research on the suspension of listed companies.So far, the literature has mainly analyzed the economic consequences of suspension.Based on the motivation for the suspension of listed companies, we find that shareholders may use this suspension to realize their own interests.(3) Previous research has mainly focused on the measures taken by companies when faced with stock pledge risk, but there is little discussion of whether these measures can actually address this risk.We provide an answer to this question and find that improving stock prices through capital operations can resolve stock pledge risk in the short term, but the effect is not significant in the long term.
陆蓉, 兰袁. 大股东股权质押与上市公司资本运作[J]. 金融研究, 2021, 490(4): 169-186.
LU Rong, LAN Yuan. Large Shareholders' Share Pledging and Capital Operations of Listed Companies. Journal of Financial Research, 2021, 490(4): 169-186.
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