Insider share pledging and firm value consequences under the COVID-19: evidence from China

He XIAO, Xin CHEN, Heyang FANG, Yifei ZHANG

Research output: Journal PublicationsJournal Article (refereed)peer-review

4 Citations (Scopus)


Share pledging, the practice in which shareholders secure a loan using their shares, has become a global phenomenon in recent years. In this paper, we investigate the effect of such corporate insider actions on outsider wealth during the pandemic. Concretely, we examine how firms’ market value change when corporate insiders pledge their shareholdings during China’s COVID-19 outbreak. It is found that market investors responded adversely to share pledging announcements by firms in the high pandemic-affected regions. Besides, the state ownership and better corporate governance structures of the pledged firms could mitigate such adverse impacts. Our study highlights a specific externality generated by corporate insiders to outside shareholders during a crisis period.
Original languageEnglish
Pages (from-to)6522-6534
Number of pages13
JournalApplied Economics
Issue number56
Early online date20 Aug 2021
Publication statusPublished - 2 Dec 2021

Bibliographical note

Funding Information:
We would like to thank the Editor and the anonymous referee for their insightful comments. We also thank conference participants for their excellent suggestions at the 2020 Academy International Business Southeast Asia Region Conference held at The Hang Seng University of Hong Kong. All errors are our own.

Publisher Copyright:
© 2021 Informa UK Limited, trading as Taylor & Francis Group.


  • COVID-19
  • event study
  • firm value
  • managerial incentive
  • share pledging


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