A Study On Tunneling Behavior Of Ultimate Controlling Shareholders Based On Non-Tradable Shares Reduction In China

In the early period of China's stock market development, shares of listed companies are divided into tradable shares and non-tradable shares. As non-tradable shares cannot exchange, the benefit orientation between controlling shareholders and minority shareholders are different, the expropriation incidents to minority shareholders occur frequently. The split-share structure reform radically changed the deficiencies of the market system, but the conflicts still exist. In the peak period of non-tradable shares reduction, people ascribe the bear market to the share reduction from the shareholders. They think the controlling shareholders transfer the benefit by selling their holding shares. In the academia, whether the "Tunneling" behavior from controlling shareholders is corrected has always been a hot topic of corporate governance research. Most studies agree that this "Tunneling" behavior has not been fully corrected, and only a small number of studies suggest the "Tunneling" behavior has been partly corrected. With the lifting in 2009 and 2010 the controversy has become increasingly fierce.As the effect controlling subject in the control chain, ultimate controlling shareholders has played an important role in the pyramid structure of listed companies, who has important implications in the decision around the non-tradable shares releasing. Therefore, researching the change of "Tunneling" behavior of Ultimate controlling shareholder of "empty" behavior can understand better whether they have lifted back after the releasing policy.Firstly, we identify some related concept and summarize kinds of weighting method of "Tunneling" behavior. We choose the suitable method after comparing the advantages and disadvantages of the all method.Secondly, we attempts to analyze the essence of the "Tunneling" behavior of ultimate controlling shareholders and study the related interpretation and theoretical basis for the lifting back of the ultimate controlling shareholders.Finally, we will select listed companies which had share releasing in 2009 as samples, and use DID model to analyze the impact of non-tradable shares reduction on the "Tunneling" behavior of ultimate controlling shareholders with Robustness Test according to the Model of LLS V(2002) The target is to verify the existence of the returning behavior and the "Tunneling" behavior has been corrected by the policy.