Research on the influence of equity pledge on corporate performance of cultural media listed companies

Jian Xi; Yuting Wu; Lu Yang

doi:10.71113/JCSIS.2025v2i1.19-35

Authors

Jian Xi Faculty of Economics and Law, Jingdezhen Vocational University of Art, China
Yuting Wu Faculty of Economics and Law, Jingdezhen Vocational University of Art, China
Lu Yang Faculty of Economics and Law, Jingdezhen Vocational University of Art, China

DOI:

https://doi.org/10.71113/JCSIS.2025v2i1.19-35

Keywords:

Controlling shareholder; Equity pledge; Equity pledge

Abstract

in China's capital market, equity pledge has emerged as a prevalent financial phenomenon, characterized by its low loan cost, abbreviated loan process, and rapid approval time. This trend continues to escalate. However, equity pledge frequently triggers explosions, and the market is reproached for its equity pledge issues. Equity pledge, although it brings convenience, also exposes potential high-risk situations, sparking widespread concerns and skepticism in the market. Little prior research delves into the micro-mechanism of equity pledge to generate economic consequences. Therefore, this paper combines empirical analysis to explore the impact of equity pledge behavior on corporate performance, thereby holding significant theoretical and practical implications.

The cultural media industry is experiencing rapid development, with its business model being distinct. This paper uses this industry as an example to examine the current status and characteristics of listed cultural media companies. However, does the equity pledge by controlling shareholders alleviate the financing constraints of enterprises, as per the original intention of the system design, and ultimately curtail the business performance of enterprises? If the research focuses only on equity pledge, financing constraints, and firm performance through simple regression, the influencing mechanism and transmission path might be overlooked, leading to ambiguous and misleading research. Consequently, this paper transcends the linear thinking in previous studies, which merely regarded the controlling shareholder's equity pledge as the explanatory variable and corporate performance as the explained variable. It further explores whether financing constraints play a mediating role in the mechanism of the controlling shareholder's equity pledge's impact on the company's operating results.

In this study, panel data from 99 selected listed companies, spanning 2018 to 2022, are selected as research samples, and a model is constructed to examine the relationship between the equity pledge of controlling shareholders and corporate performance. The findings are as follows: (1) There is a significant negative correlation between the shareholding pledge of controlling shareholders and the company's operating results. The regression remains significant even after controlling for some variables and further controlling for the annual and individual effects. (2) The findings of the Bootstrap mediation effect test demonstrate a significant mediating influence of financing constraints on equity pledges and corporate performance. Moreover, the results of the significance level and regression coefficient symbol reveal that the equity pledge of controlling shareholders exacerbates the restrictive impact on corporate performance by alleviating the intermediary path of financing constraints encountered by enterprises.

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