Do Controlling Shareholders Who Pledged Their Shares Affect Sustainable Development? An Investigation Based on the Perspective of Corporate Innovation

Caiyue Ouyang, Xin Wang and Jiacai Xiong
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Caiyue Ouyang: School of Economics and Management, Beijing Jiaotong University, Beijing 100089 China
Xin Wang: School of Business, Renmin University of China, Beijing 100089, China
Jiacai Xiong: School of Accounting, Jiangxi University of Finance and Economics, Nanchang 330013, China

Sustainability, 2019, vol. 11, issue 10, 1-17

Abstract: We examine the impact of share pledging (SP) on a firm’s innovation using a sample of Chinese firms. Our findings show that when controlling shareholders pledged their shares in personal loans, their firm’s innovation decreases. Our findings are robust for alternative metrics of innovation and SP. Additional analyses suggest that when controlling shareholders have little ownership or stock price volatility is high, the impact of SP on corporate innovation magnifies, presumably due to the high margin call risk of share against the pledged controlling shareholders. Overall, our study shows that the self-interest of controlling shareholders with pledged shares impedes corporate innovation, thereby impeding the sustainable development of society.

Keywords: share pledging; corporate innovation; self-interest; sustainable development (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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