| In the daily business activities of listed companies,related-party transactions can be seen everywhere.Related-party transaction can reduce transaction cost and improve transaction efficiency;Related enterprises know each other,which can also reduce information asymmetry and the risk of breach of contract.At the same time,because of its concealment and easy manipulation,related-party transactions have gradually become the means for major shareholders to tunnel the listed companies.Under the related transactions,the transaction terms and process is easily be manipulated intendedly,so the substance of related transactions is difficult to be judged and the legality of related transactions is hard to be ensured.A large number of studies have found that companies with absolute controlling shareholders tend to have larger amounts of related-party transactions due to their large amounts of shares and lack of balances.By virtue of their absolute control,major shareholders hollow out the listed companies by ways of related purchase and sales,related asset injection,related guarantee,related-party capital occupation and other means,so as to seek profits for themselves.The agency conflicts between major shareholders and small shareholders are increasingly fierce.Therefore,it has become an urgent problem to be solved that how to prevent major shareholders from using related-party transactions to tunnel and prevent major shareholders from using control rights to obtain private interests.Under the above background,this paper takes the listed company *STAT as the research case to discuss the tunneling behavior of major shareholders through its related-party transactions.The equity of *STAT is relatively concentrated,the major shareholder and actual controller,although the shareholding is only 31.57%,but far exceeds the sum of the shareholding of the top nine shareholders.And the major shareholder has been the chairman of the company and the legal representative,and could directly control the business decisions of listed companies and the election of members of Board of Directors and Board of Supervisors.By combing the related-party relationship of *STAT and its tunneling events,it has been found that there are four ways for *STAT to tunnel related-party transactions:operating capital occupation,non-operating capital occupation,unfair asset replacement and related-party guarantee beyond capacity.After analysis,it is founded that the aims for the major shareholder to tunnel *STAT are below two reasons.On the one hand,the major shareholder actively expanded his own industries and needed financial support.On the other hand,the related-party Shanxi xintai iron and steel co.LTD was facing financial difficulties.After further analysis,it is believed that there are six main reasons for the occurrence of tunneling *STAT under the related-party transactions:First,the ownership of shares of *STAT is concentrated,and major shareholder owns the highest proportion.Second,the internal governance of *STAT is imbalanced.The specific performance was that there is a phenomenon of cross-employment between the company's senior management and related parties,and it is difficult for senior executives to keep independent;large shareholders and senior executives are conscientiously tunneling.The tunneling is secret;independent directors and supervisors fail to fulfill their supervisory obligations in a timely manner.Third,the internal control execution of *STAT is absent.*STAT was issued a negative opinion of internal control by the BDO,and there were major deficiencies in the company's internal control operation.Fourth,*STAT has repeatedly delayed disclosure of items that required to be disclosed,concealing information related to related party transactions.Fifth,the related party transaction system is not perfect,which makes the major shareholder tunneling opportunity.Sixth,the weak supervision and punishment by the regulatory authorities have reduced the tunneling cost.The tunneling behavior of major shareholders has brought great adverse effects on *STAT and its minority shareholders.For *STAT,the company's financial performance continued to decline,far behind the average level of the industry,and it faced great financial and operational risks,such as huge overdue debts,high financial expense ratio and high guarantee risks.In 2015 and 2018,the company was warned of delisting risks,and its development ability was questioned.For many small and medium-sized investors,the decline of *STAT stock price,the decline of earnings per share and net assets per share,and the inability to carry out profit distribution make the investment of small and medium-sized investors suffer a large loss.In order to prevent the tunneling behavior of major shareholders,this paper proposes specific recommendations from five aspects.First,improve the internal governance mechanism of the company.The methods that can be adopted include: increasing the participation of small and medium-sized shareholders in the shareholders' meeting,avoiding the cross-boarding of board members and related-party executives,stimulating the independent directors and supervisors to act actively.Second,optimize the company's internal control from three aspects : purchase payment,sales receipt and fund management.Third,improve the quality of information disclosure by strengthening the timeliness of information disclosure,establishing a cumulative punishment mechanism for information disclosure,and improving the quality of information disclosure personnel.Fourth,improve the related-party trading system.This includes,but is not limited to,establishing the approval and supervision mechanism for related-party transactions,setting associated credit sales quotas and guarantee limits,and reducing the proportion of purchases and sales between related parties.Fifth,strengthen external supervision and punishment.When the regulatory authorities increase supervision,they must also strengthen penalties for tunneling behavior.At the same time,extensive monitoring can be done with the help of the media.In summary,by using the literature research method and case analysis method,this paper combines theory with practice.It gives suggestions for tunneling of major shareholders under related transactions with analysis of specific cases.What's more,it provides a certain reference to the stock market with the same situation of the company. |
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