Equity pledge, pledgor type and investment efficiency

Karren Lee-Hwei Khaw; Jiaying Chen; Muhammad Awais Gulzar; Ahmad Hakimi Tajuddin

doi:10.24135/afl.v12i1.616

Equity pledge, pledgor type and investment efficiency

Karren Lee-Hwei Khaw, Jiaying Chen, Muhammad Awais Gulzar, Ahmad Hakimi Tajuddin

Malaysia School of Business

Research output: Contribution to journal › Article › Research › peer-review

Abstract

Equity pledging is susceptible to agency problems and substantial risk, resulting in inefficient corporate investment. We show that the negative impact is not just induced by controlling shareholders but also pledged by non-controlling shareholders. Our results add that SOEs with control rights via controlling shareholders or actual controllers can mitigate investment inefficiency problems. We conclude that pledgor-type matters and the impact of non-controlling shareholders' pledges should not be neglected.

Original language	English
Pages (from-to)	22-32
Number of pages	11
Journal	Applied Finance Letters
Volume	12
Issue number	1
DOIs	https://doi.org/10.24135/afl.v12i1.616
Publication status	Published - 16 May 2023

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Cite this

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