Research on Market Contagion of Share Pledge: Risk and Investor Protection under Registration System Reform

School of Applied Economics, Guang Dong Bai Yun University of Business, 510000 Great Wall Shengshi Jiayuan, Futian District, Shenzhen City, Guangdong Province, China

^* Corresponding author: huang11262003@163.com

Abstract

Under the registration system reform, China’s capital market faces new opportunities and challenges. The market contagion of listed companies’ share pledge risk is increasingly prominent. It threatens investors’ interests. This study explores the market contagion mechanism and investor protection strategies of share pledge risk under the registration system reform through qualitative research. Gree Electric and Wanfeng Aowei are used as cases. The study finds that share pledge risk has high leverage, information asymmetry, and strong market contagion. Its contagion mechanism is mainly reflected in stock price fluctuation transmission. It also involves industry-related contagion, capital chain contagion, and investor sentiment contagion. Risk diffusion is caused by insufficient information disclosure. Based on the findings, the study proposes investor protection strategies. These include improving information disclosure systems, strengthening market regulation, optimizing investor education, and perfecting laws and regulations. This study aims to provide theoretical and practical guidance for preventing market contagion of share pledge risk. It also aims to protect investors’ interests and promote stable and healthy capital market development.