Discussion On Controlling Shareholders' Tunneling Behavior Under Related-Party Transaction

With the rapid development in the stock market of China,the increase of enterprise financing channels have optimized the role of resource allocation promoting the development of the real economy.However,due to the inherent defects of the system in China,Listing Corporation has been the existence of the controlling shareholder of the company's absolute control of the company's operation structure,behind these phenomena are because the controlling shareholder in order to pursue the maximization of the interests,They are based on the advantages of their ownership,has an important business decision-making control in the Listing Corporation.The controlling shareholder is the actual controller of the Listing Corporation,they sometimes take the interests of minority shareholders to achieve their interests.In some of the more developed western countries in the securities industry,the ownership structure of their listing Corporation is different from that of China,their ownership is not concentrated,there is no controlling shareholder,therefore,the phenomenon of “tunneling” excavation in the Listing Corporation is unlikely to happen,however,in China,there is usually a high proportion of the controlling shareholder in the Listing Corporation,because it holds the majority of the equity will affect the listing Corporation's business decisions and daily operations.The high concentration ownership makes the agency conflict of small and medium shareholders and controlling shareholders more serious,moreover,the lack of investor protection law in our country makes the phenomenon that controlling shareholders deprive the interests of minority shareholders becomes a very serious problem to restrain the development of securities market in China,this makes it necessary to explore the behavior of controlling shareholders' benefits.Because of the private interest of the control right,controlling shareholder has gradually produced more and more benefits,not only won the profit of the Listing Corporation,but also annexed the interests of minority shareholders.The so-called "tunneling" refers to the controlling shareholder of the enterprise to dig a tunnel without the sun,the act of transferring the assets and profits of an enterprise into its own hands.The controlling shareholder's tunneling method is divided into three ways: equity financing,cash dividend and related party transactions,but as long as there is a related party transaction,the controlling shareholder of tunneling behavior to add a strong catalyst.In recent years,more and more controlling shareholder of Listed Companies with their absolute control through related party transactions to deprive the interests of minority shareholders to expand their income in our country is also emerge in endlessly.The controlling shareholders use related party transactions to tunnel the listing Corporation,not only has weakened the commercial interest of the enterprise but also has caused the influence to the middle and small shareholder's income,especially in state owned enterprises,the "tunneling" behavior of the related party transactions is even worse.Listing Corporation's board of directors efficiency,equity structure and the company's internal incentive mechanism and other factors have a significant impact on the controlling shareholder of the "tunneling" behavior.But after the split share structure reform,the interests of non-tradable shareholders and tradable shareholders become the same,this makes the controlling shareholder of the tunnel excavation amount and proportion have declined.This paper makes a case analysis of the "tunneling" behavior of controlling shareholders from the perspective of related party transactions,to discuss the influence and motivation,and to improve the quality of the listing Corporation,to reduce the controlling shareholder of the company's "tunneling" behavior to put forward opinions and suggestions.This paper mainly from the case of "tunneling" behavior analysis,At first,this paper expounds the basic theory of "tunneling" behavior,this paper introduces the related theory of "tunneling" of controlling shareholders in related party transactions,Including related party transactions "tunneling" the main way,the basic features and economic consequences.Then the Da Yuan shares of the company as an example to conduct in-depth analysis,operating conditions of the background and company of Da Yuan shares,from the analysis of the impact of the implementation process to the behavior,experience on the case of "tunnel excavation" for the related party transactions.Secondly,the analysis of the internal and external causes is carried out by the "tunnel excavation" case,so as to discover the reason of "tunneling" behavior.Finally,it draws the conclusion and inspiration and puts forward the corresponding suggestions.On the basis of the previous research,take the combination of large shares of the controlling shareholder of "tunneling" behavior in the form of case analysis,It is an in-depth analysis of the individual cases as the object,explain the influence of "tunneling" behavior on the small and medium shareholders,and then make relevant measures to safeguard the interests of minority shareholders.The biggest problem of this case is that as an independent case cannot represent the whole,the problems are not covered;but individual cases can be more in-depth analysis,to solve the problem of an antidote against the disease,and may represent a common phenomenon to illustrate the problem.