Share Pledges and Margin Call Pressure
學年 104
學期 1
發表日期 2016-01-03
作品名稱 Share Pledges and Margin Call Pressure
著者 Chan, Konan; Chen, Hung-Kun; Hu, Shing-yang; Liu, Yu-Jane
會議名稱 2016 American Finance Association Annual Meeting
會議地點 San Francisco, USA
摘要 It is common practice worldwide for corporate insiders to put up stock as collateral for personal loans. We highlight a potential problem in such pledging. When controlling shareholders face a margin call threat if stock prices fall below the required level for a loan, they have an incentive to use corporate resources for their private benefits. We develop and test a margin call hypothesis that controlling shareholders may initiate share repurchases to fend off potential margin calls associated with pledged stocks in order to maintain their control rights. Investors seem to recognize such opportunistic behavior and discount the potential benefits of repurchase programs. However, share pledges are not reliably related to repurchases when control rights are not a concern. We further show that regulatory restrictions of control rights on pledging greatly reduce the likelihood of firms to repurchase. Overall, our results shed light on the impact of share pledges on corporate decisions.
關鍵字 share pledges;margin call;repurchases;control right;controlling shareholders;opportunism
語言 en_US
會議性質 國際
研討會時間 20160103~20160105
國別 USA
出處 2016 American Finance Association Annual Meeting

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