The Research About Propping Behaviors Of ST Corporations' Controlling Shareholders

According to the ST system of Chinese listed companies: if listed companies suffer a loss in two consecutive years, the stock exchange will be sentenced special treatment by Stock Exchange; if they can not turn around in the third year, the stock exchange will be sentenced pause listed. In such circumstances, if the listed company's stock were sentenced pause treatment, the most direct management consequence is that the listed company can not continue to exchange stock. It will lose one of the most important functions in the capital market - financing function. And in our country, listed company is a shell. This "shell" is an extremely scarce resource. Once pause listed, the value of these scarce resources will face the consequences of loss. This is a very large loss for every major shareholders listed company.In this special period, each shareholder of ST companies will certainly try their best to support the management of listed companies. They try to make it profitable in order to maximize their own long-term interests. This article is based on this particular security system context of our country. We researched when the listed company is in ST conditions, whether the propping behavior of the controlling shareholders is existed and how much is the intensity of propping. Previous studies have proved that controlling shareholders of listed companies prop it mainly in the following ways: asset restructuring, debt restructuring, change manager, related transactions, searching for government grants. Most of these acts relate to non-recurring gains and losses. Because listed companies are in a continuous state of loss. Because it's impossible to improve the core competitiveness of listed companies in a very short period.Currently, the literature about propping behavior is rare. Based on this, this paper constructed a propping strength variable about propping behavior of listed companies'controlling shareholders. And also analyzed a series of relevant factors, such as the controlling shareholder's ownership percentage, the nature of who ultimately control ST companies, asset-liability ratio, size of the ST Company, rate of net profit and total assets, etc... Our research focuses on controlling shareholder's ownership percentage and the nature of the ultimate controller (whether state-owned). This paper selects all listed companies of Shanghai and Shenzhen Stock which were withdrawer the special treatment or risk delisting warning in the 2005– 2008. This study showed that the propping strength of ST Company's controlling shareholder associated with the above factors. It is a positive correlation relationship between propping strength and controlling shareholder's ownership percentage. When the final controller is country, ST listed companies can obtain more propping. This proves the significant existence of soft budget constraint.