Share Pledges and Margin Call Pressure

淡江大學機構典藏 > 商管學院 > 財務金融學系暨研究所 > 會議論文 > Item 987654321/106620

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题名:	Share Pledges and Margin Call Pressure
作者:	Chan, Konan;Chen, Hung-Kun;Hu, Shing-yang;Liu, Yu-Jane
关键词:	share pledges;margin call;repurchases;control right;controlling shareholders;opportunism
日期:	2016-01-03
上传时间:	2016-04-27 11:18:54 (UTC+8)
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.
關聯:	2016 American Finance Association Annual Meeting
显示于类别:	[財務金融學系暨研究所] 會議論文

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