The Research On Changes In The Level Of Major Shareholder Expropriation Of YH Company Before And After Stock Pledge

Under the highly concentrated ownership, the key point of corporation management is moving to the relationship between the major shareholders and the minority shareholders rather than the shareholders and the managers. Because of their highly controlling rights, the major shareholders can manipulate listed companies’ interest and it cause losses. Therefore, it is significant to study business activities of major shareholders. In Chinese listed firms, stock pledge has become one of the important financing activities of major shareholders. There were1620cases of stock pledge in2011and2014cases in2012. After stock pledge, major shareholders, on one hand, still hold the control rights; on the other hand, they transfer the risk of the unsteady stock price, which will pose a risk to the listed companies. Thus, this dissertation takes stock pledge as the point cut to study business activities of the major shareholder of YH Company, examines the existing problems, and finds the solution of them.Based on Principal-agent Theory and Signal Theory, this dissertation firstly analyzes the major shareholders’ cost to tunnel the listed companies before and after stock pledge, and it shows that the pledge will reduce the cost to tunnel the listed firms under certain conditions. More exactly, stock pledge is likely to induce major shareholders to increase expropriation to the listed companies, or it can become one of become powerful means for the major shareholders to pass on the cost to others by increasing expropriation to the listed companies. This dissertation next focuses on the case of YH Company, and discusses its major shareholder XT Group Company’s cost to tunnel YH Company. Further more, it analyzes expropriation level to the listed companies before and after stock pledge, from the perspective of connected guarantee, connected transaction and appropriation of non-operating funds. The research found, after stock pledge, the cost of XT Group Company to tunnel YH Company could significantly fall and XT Group Company increased the level of encroachment on the interests of listed companies. Then, the artical analyzes the reasons that XT Group Company achieves the occupation. Finally, some recommendations were put forward to constraint group B’s activities, were put forward from four aspects:paying attention to equity pledge of the major shareholder of YH Company, improving the corporate governance structure, perfecting the internal control system, and increasing the scope of disclosure of information.