RESEARCH ON THE IMPACT OF EQUITY PLEDGE ON ENTERPRISE VALUE—TAKE SMES AS AN EXAMPLE

The pledge of controlling shareholders’ equity is one of the important ways for small and medium-sized enterprises to raise funds. However, due to the complexity of controlling shareholders’ motivations for equity pledge, equity pledge has become a double-edged sword that affects the sustainable development of enterprises. This study explores the impact of controlling shareholder equity pledge on corporate value by constructing an empirical model, so as to provide suggestions for small and medium shareholders, regulatory agencies and related financial institutions. The empirical results show that the pledge of controlling shareholders’ equity is conducive to the improvement of corporate value; however, under different macro policy adjustments, the impact of equity pledges on corporate value is different. In the period of loose monetary policy, the pledge of controlling shareholders’ equity has a significant positive effect on corporate value .On the contrary, during the monetary policy tightening period, equity pledge has a significant negative impact on corporate value.

A Relação de Poder e as Ações de Responsabilidade do Controlador nas Sociedades Anônimas ## The Relationship of Power and Responsibility Actions of the Controller in Corporations

O presente estudo tem como objetivo analisar as relações de poder e a responsabilidade do acionista controlador, conjuntamente com suas ações correlatas, nas sociedades anônimas. Serão analisados quais os modelos de controle na sociedade anônima, os deveres e responsabilidades do controlador e os tipos de ação para sua responsabilização em caso de abuso do poder desse controle. Um caso real foi apresentado para demonstrar como é possível discutir a responsabilidade do controlador por possível abuso na companhia. Foram utilizados os métodos dedutivo, com análise legislativa e doutrinária e o empírico. ABSTRACTThis study aims to analyze the power relations and the responsibility of the controlling shareholder, together with their related actions, in public limited companies. It will be analyzed what are the types of control in the corporation, the duties, and responsibilities of the controller and what are the types of actions for its accountability in case of abuse of the control power. A real case was presented to demonstrate how it is possible to discuss the controller's responsibility for possible abuse in the company. Deductive methods were used, with legislative and doctrinal and empirical analysis.

Controlling shareholders' stock pledges and strategic change: the moderating effects of corporate governance

PurposeThe authors analyze the effects of controlling shareholders' stock pledging on firms' strategic change behavior, and investigate how the balance of power between shareholders and analyst coverage moderates those effects.Design/methodology/approachEmploying fixed effects models, the authors test hypotheses based on Chinese listed company data from 2011 to 2017.FindingsControlling shareholders' stock pledges has a negative effect on strategic change. As the balance of power among shareholders and/or analyst coverage increases, it mitigates the effect of controlling shareholder stock pledges on strategic change. In particular, the balance of power between shareholders and analyst coverage weakened the relationship between controlling shareholder stock pledges and strategic change. Lastly, after distinguishing family from nonfamily firms, the authors discovered that these findings only held for family firms.Originality/valueThis study makes important contributions to strategic change, stock pledge and family firm literature, and also provides guidance on firms' strategic change practices.

Executive Compensation and Performance of Companies in the Brazilian Capital Market: Evidence of Negative Relationship with Focus on the Interests of the Controlling Shareholder

This study aims to analyze the relationship between executive compensation and performance in public companies listed on the Brazilian capital market – [B]3 Brasil Bolsa Balcão. Theoretically, the study is based on the agency theory focusing on the principal-principal perspective of agency conflict. The sample comprised the 100 companies with the highest liquidity in the trading of shares listed on the [B]3 during the 2010-2015 period, totaling 488 observations. Six hypotheses were developed, and several variables were measured to test the relationship between executive compensation and performance. For the selected sample, the results of the estimated econometric models indicate that executive compensation has a negative relationship with variables performance, presence of family on the board of directors, voting rights shares, and the duality of two share classes, voting and non-voting. The results also indicate a negative relationship between ownership concentration and performance and a nonsignificant relationship between executive compensation and family control. The synthesis of the results indicates that the corporate governance model adopted by Brazilian public companies prioritizes the interests of the controlling shareholder instead of executive compensation.

5. Corporate personality

This chapter deals with the legal personality of a company which is separate from its members, capable of owning property, entering into contracts and being a party to legal proceedings. It considers the case Salomon v A Salomon and Co Ltd [1897] AC 22, in which the House of Lords affirmed separate corporate personality by rejecting attempts, on behalf of creditors, to impose liability for a failed company’s debts on its controlling shareholder. The consequences of separate corporate personality are also discussed, particularly with respect to a company’s human rights (or personal rights). In addition, the chapter examines the process known as ‘piercing the corporate veil’ in relation to the evasion principle; how an artificial entity can have legal personality; and a number of particularly significant court cases. Finally, it looks at corporate law theory and considers whether companies are grammatically singular or plural.

Unfair prejudice in United Kingdom Company Law

It is common that the majority shareholders in a corporation take action that unfairly prejudices the minority. A majority shareholder occupies a dominant position in the decision-making process of the company's affairs and can control the company with the principle of majority rule. In the process of company development, the interests of the majority shareholders may diverge from the interests of the company. In this case, the majority of shareholders may engage in unfair prejudice conduct that harm the interests of the company and minority shareholders for their own benefit. Consequently, to some extent, the principle of majority rule provides the possibility for the controlling shareholders to abuse voting rights, which often constitutes damage to the interests of minority shareholders. In addition, due to the reliance on the controlling shareholder, the directors tend to only take into account the interests of the majority shareholders, with the result that ignore the rights and interests of non-controlling shareholders. Especially in private companies, minority shareholders not only cannot sell their shares in the stock exchanges without restrictions to exit the company, but also may be subject to more severe oppression by the actual controller of the company. When minority shareholders cannot obtain relief within the company, it is necessary for aggrieved shareholders to bring an action against the majority shareholders to protect their rights. However, under the rule in Foss v Harbottle, shareholders only be allowed to sue if they meet the exceptions. Due to the limited application scope of these exceptions, the aggrieved shareholders are often unable to get timely and effective relief in practice. In response to this problem, statutory unfair prejudice provisions are introduced to balance the interests of majority shareholders and minority shareholders, and to prevent shareholder oppression in corporate governance. It emphasizes judicial intervention to protect the legitimate interests of shareholders. Compared with just and equitable winding up and derivative action, the unfair prejudice is regarded as a mechanism for minority protection as it covers a variety of remedies and leaves the court with greater discretion.