The Impact of Equity Pledge on Investment from the Perspective of Financing Constraints
- DOI
- 10.2991/icemse-19.2019.2How to use a DOI?
- Keywords
- equity pledge, corporate investment, financing constraints
- Abstract
Taking the GEM listed companies in 2014-2018 as the research object; the investment of such enterprises is generally limited by internal cash flow. Then analyzing equity pledge of controlling shareholders in enterprises with financing constraints, there is a positive relationship between the degree of financing constraints and the proportion of equity pledge. Finally, from the perspective of financing constraints, the regression model of equity pledge and investment is constructed. The results find that the behavior of equity pledge triggers short-term market value management and agency problems, which inhibits corporate investment thereby. In small-scale enterprises, most of the pledged funds are used by the controlling shareholders, rather than meeting financing needs. Therefore, the equity pledge increases the financing constraint, resulting in more serious underinvestment.
- Copyright
- © 2019, the Authors. Published by Atlantis Press.
- Open Access
- This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).
Cite this article
TY - CONF AU - Jing Zhang PY - 2019/09 DA - 2019/09 TI - The Impact of Equity Pledge on Investment from the Perspective of Financing Constraints BT - Proceedings of the 2019 3rd International Conference on Education, Management Science and Economics (ICEMSE 2019) PB - Atlantis Press SP - 5 EP - 11 SN - 2352-5428 UR - https://doi.org/10.2991/icemse-19.2019.2 DO - 10.2991/icemse-19.2019.2 ID - Zhang2019/09 ER -