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Performance and risk of energy industrial firms with stock pledge in China

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  • Ni, Zaiwen
  • Fang, Libing
  • Liu, Haiyue
  • Lu, Xinyu

Abstract

We investigate the effect of stock pledges on the firms' performance and risk in energy industry of China. The results show that the performance of firms decreases in the existence of stock pledge. Stock pledge generally decreases stock return volatility, except for the increase in forced liquidation pressure. Stock pledge increases downside risk and crashes. Finally, we demonstrate the different effects of the stock pledge in various regions of China.

Suggested Citation

  • Ni, Zaiwen & Fang, Libing & Liu, Haiyue & Lu, Xinyu, 2022. "Performance and risk of energy industrial firms with stock pledge in China," Finance Research Letters, Elsevier, vol. 46(PB).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pb:s1544612321004049
    DOI: 10.1016/j.frl.2021.102410
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    References listed on IDEAS

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    1. Deng, Xiaohu & Gao, Lei, 2018. "The monitoring of short selling: Evidence from China," Research in International Business and Finance, Elsevier, vol. 43(C), pages 68-78.
    2. Ying Dou & Ronald W Masulis & Jason Zein, 2019. "Shareholder Wealth Consequences of Insider Pledging of Company Stock as Collateral for Personal Loans," The Review of Financial Studies, Society for Financial Studies, vol. 32(12), pages 4810-4854.
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    5. Li, Michelle & Liu, Chelsea & Scott, Tom, 2019. "Share pledges and firm value," Pacific-Basin Finance Journal, Elsevier, vol. 55(C), pages 192-205.
    6. Jung Yun Choi & Doo Bong Han, 2018. "The Links between Environmental Innovation and Environmental Performance: Evidence for High- and Middle-Income Countries," Sustainability, MDPI, vol. 10(7), pages 1-14, June.
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    Cited by:

    1. Yan, Guan & Liu, Zhidong, 2023. "Interconnectedness of financial institutions based on pledged shares in China," Finance Research Letters, Elsevier, vol. 57(C).
    2. Liu, LiHua & Li, YuQian, 2024. "Enterprise financialization and stock price crash risk," Finance Research Letters, Elsevier, vol. 60(C).
    3. Tian, Zhongliang & Tang, Ruoyuan & Liu, Wenhe & Qi, Yuan, 2024. "Controlling shareholder's equity pledge and corporate financialization," Finance Research Letters, Elsevier, vol. 60(C).
    4. Minh-Quan Nguyen & Nhat-Tan Le & Khuong Nguyen-An & Duc-Thi Luu, 2024. "An Integral Equation Approach for the Valuation of Finite-maturity margin-call Stock Loans," Papers 2407.14728, arXiv.org.

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