Linkages between share pledging, stock price risk and profitability: Evidence from the P.R. China.

ABSTRACT: Share pledging has become popular as a method of loan collateral among Chinese shareholders. Our research used a sample of Chinese listed firms between 2008-2018 and produced two main findings. Firstly, we found a negative association between stock price risk and firm profitability. Our second finding was that the interaction effect of share pledging and stock price risk is greater on firm profitability than the effect of stock price risk itself. We examined the role of share pledging by modeling pooled OLS and fixed effects using share pledging behavior, controlling shareholders' share pledging and the share pledging ratio to reinforce the robustness of our results. Furthermore, we investigated the Davis Double Play effect of share pledging to analyze how share pledging affects stock pric

SUBMITTER: Li F 

PROVIDER: S-EPMC8601517 | biostudies-literature | 2021

REPOSITORIES: biostudies-literature