Research On The Board's Independence, Ownership Balance And The "Tunneling" Behavior Of Big Shareholders

According to previous research and analysis, both listed companies and non-listed companies in many countries, it is obvious that large shareholders and minority shareholders have a conflict of interest. In China, due to the special institutional causes, the ownership structure of listed companies and the internal and external governance mechanisms are unreasonable, the board of supervisors is subject to shareholder, legal protection of minority shareholders is still weak, the supervisory of external audit did not play a good role, large shareholders assuming a frequent occupation of the interests of the listed companies through related party transactions is widespread. Number of factors combined makes us transfer our focus from the conflict of interests between shareholders and managers to the conflict of interest between shareholders. In 2006, for our companies, particularly the listed companies are an important year. The company's external environment has undergone significant changes:firstly, the promulgation of the new accounting standards; secondly, the split share structure reform is basically completed. Select samples of this period can help us to find out the recent shareholder "tunneling" change of behavior and the influence factors of tunneling, and also can provide an empirical basis to evaluate the effects of these policies and measures.This paper attempts to use the agency theory, asymmetric information theory, and the power balance with shareholder structure theory, from the perspective of corporate governance, to analysis the "tunneling" behavior of major shareholders of listed companies in China.Theatrically, from two aspects of internal governance mechanisms:ownership structure, board governance, to do some depth analysis. In Evidence, the paper selected years between 2005 -2008, listed companies in China, about 6093 valid samples, from the perspective of the entrenchment of Controlling Shareholders, to analyze the corporate governance factors and substantial shareholder "tunneling" behavior in an empirical test. Main conclusions are as follows:(1) during the reform period and after completion of the reform, the largest shareholder's ownership percentage is declining obviously, and so did its "tunneling" behavior. At the same time, we found that the control variable of annual does greater impact on the regress analysis, it also reminds us that although this study had the desired effect, but in the future research we should focus on "tunneling" changes and major "tunneling" approach of large shareholders, find ways to strengthen corporate management. Adding the controlling variables of year, there is a significant positive correlation between largest shareholders and "tunneling" behavior in the multivariate regression analysis. It passed the significance test. In addition, from the nature of controlling shareholder, there is a significant positive correlation between the state-owned controlling shareholder and "tunneling". Other major shareholders SH25, SH35 was significantly negatively correlated with "tunneling" behavior. (2) The Board of Management has limited effects. The proportion of independent directors has no significant effect of the supervision on the major shareholders of the "tunneling" behavior. So did the reputation of the independent directors. In addition, if the chairman and general manager are the same person would increase the major shareholders'"tunneling" behavior. (3) In accordance with the above analysis, we did some further research on power balance with shareholder structure, independence of the board and tunneling behavior. The results showed that in the lack of power balance with shareholder structure regress analysis, there is no significant correlation between the proportion of independent directors and major shareholders "tunneling" behavior. But in the case of power balance with shareholder structure, there is significantly negative related between the equity proportion of independent directors and major shareholders "tunneling" behavior. It is indicated that the environment of power balance with shareholder structure is benefit for the independence of independent directors to play. However, the reputation of the independent directors of the lack of power balances with shareholder structure even more significant than the power balances with shareholder structure, it has negative correlation with the "tunneling" behavior. It is indicated that controlling shareholders in order to cover up their own "tunneling" motivation, tend to choose good reputable independent directors under the lack of power balances with shareholder structure. Meanwhile we can also get an idea that reputable independent directors can protect the benefits of other shareholders. In addition, if the chairman and general manager are the same person, no matter the corporate structure own power balances or not, it has significant positive correlation with "tunneling" behavior.