Proceedings of the 2019 3rd International Conference on Education, Management Science and Economics (ICEMSE 2019)

The Impact of Equity Pledge on Investment from the Perspective of Financing Constraints

Authors
Jing Zhang
Corresponding Author
Jing Zhang
Available Online September 2019.
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/).

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Volume Title
Proceedings of the 2019 3rd International Conference on Education, Management Science and Economics (ICEMSE 2019)
Series
Advances in Economics, Business and Management Research
Publication Date
September 2019
ISBN
10.2991/icemse-19.2019.2
ISSN
2352-5428
DOI
10.2991/icemse-19.2019.2How to use a DOI?
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  -