Research on the Impact of Equity Pledge on Enterprise Value—Take SMEs as an Example

Jue-ming WANG, Bao-bao LI, Cheng-xuan GENG

Abstract


The pledge of controlling shareholders’ equity is one of the important ways for small and medium-sized enterprises to raise funds. However, due to the complexity of controlling shareholders’ motivations for equity pledge, equity pledge has become a double-edged sword that affects the sustainable development of enterprises. This study explores the impact of controlling shareholder equity pledge on corporate value by constructing an empirical model, so as to provide suggestions for small and medium shareholders, regulatory agencies and related financial institutions. The empirical results show that the pledge of controlling shareholders’ equity is conducive to the improvement of corporate value; however, under different macro policy adjustments, the impact of equity pledges on corporate value is different. In the period of loose monetary policy, the pledge of controlling shareholders’ equity has a significant positive effect on corporate value .On the contrary, during the monetary policy tightening period, equity pledge has a significant negative impact on corporate value.

Keywords


SMES, Equity Pledge, Corporate Value, Monetary Policy


DOI
10.12783/dtem/mebit2021/35620

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