Financing constraints and share pledges: Evidence from the share pledge reform in China |
| |
| Institution: | 1. School of Economics and Management, Northwest University, 1 Xuefu Ave, Chang''an District, Xi''an 710127, China;2. School of Economics, Renmin University of China, 59 Zhongguancun Street, Beijing 100872, China;3. National Academy of Development and Strategy, Renmin University of China, 59 Zhongguancun Street, Beijing 100872, China;1. Shenzhen Audencia Financial Technology Institute, Shenzhen University, 3688 Nanhai Avenue, Nanshan District, Shenzhen, China;2. Monash Business School, Monash University, Wellington Rd, Clayton, VIC 3800, Australia;3. School of Business and Creative Industries, University of Sunshine Coast, 90 Sippy Downs Dr, Sippy Downs, QLD 4556, Australia;4. Adelaide Business School, Adelaide University, Adelaide, SA 5005, Australia;1. Department of Economics and Finance, Woody L. Hunt College of Business, The University of Texas at El Paso, 500 W. University Ave., El Paso, TX 79968, United States of America;2. Department of Finance, College of Business, Florida State University, United States of America;1. RB 239A, Department of Finance, College of Business Administration, Florida International University, Miami, FL 33199, United States of America;2. Finance and accounting Area, Indian Institute of Management, Indore, India;1. School of Business, University of Connecticut, 2100 Hillside Road, Storrs, CT 06269, United States of America;2. United States of America;3. Department of Economics and Finance, Robert C. Vackar College of Business & Entrepreneurship, University of Texas Rio Grande Valley, 1201 W University Dr, Edinburg, TX 78539, United States of America;4. Manning School of Business, University of Massachusetts Lowell, 72 University Avenue, MA 01854, United States of America |
| |
| Abstract: | Financing constraints are important to triggering controlling shareholders' share pledges. However, the related literature faces two major challenges: the endogeneity problem and the lack of direct evidence of why and how individual share pledges can ease corporate financing constraints. Based on China's Share Pledge Reform (SPR) in Q4 2012 and the phenomenon that private firms face discrimination when obtaining bank loans, this paper studies the impact of financing constraints on share pledging behavior and its mechanisms by building a difference-in-differences (DID) model. The SPR makes it more convenient for shareholders to raise money through share pledges, and shareholders of private firms facing stronger financing constraints are more vulnerable to this reform than are state-owned enterprises (SOEs). After the SPR, the probability of share pledging by controlling shareholders of private firms is approximately 23.04% higher than that of controlling shareholders of SOEs, and the pledge ratio is approximately 16.53% higher. Further tests reveal that, after the SPR, controlling shareholders of private firms are more inclined than those of SOEs to provide loans to the company to alleviate its financing constraints. Heterogeneity tests further corroborate the finding that this effect is more significant in private firms that are smaller and do not have shareholders of banking and institutional firms among their top ten shareholders. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
