Analysis And Prevention Research On Large Shareholders' Empty Behavior In Family Business

Financial fraud and credit market debt default incidents have frequently appeared in the management of listed companies in China.The true appearance of these violations is often that large shareholders use their own advantages to encroach on small and medium-sized shareholders to seek their own interests.Since April 2005,the Chinese government and market management departments have initiated shareholding split reform,and introduced a series of regulatory measures including standardizing the insider trading of listed company shareholders and improving the information disclosure system.Despite this,it has not effectively restrained the illegal acts of large shareholders hollowing out listed companies and encroaching on the interests of small shareholders.The private economy has developed rapidly since the reform and opening up.Family businesses have become the important components of China's economic market.Therefore,family business has also become a separate academic field and have been studied by Chinese scholars.This article selects the first listed company that was forced to delist in 2019.The company has the characteristics of a typical family business.Since the Wang family's backdoor listing on the Shenzhen Stock Exchange,the Wang family,its family's major shareholder uses various methods to transfer funds of listed companies,and uses false commercial paper to make family groups occupy listed company's funds for a long time.Such action makes the listed company's capital flow unable to flow normally,the company's economy began to deline,and the company suffer a great hurt.It only took 5 years for Huaze to withdraw from listing to delisting.During this period,it was repeatedly suspended.Those all caused by the Wang family.Huaze,the family-controlled listed company,was withdrawn by the Wang family which evaded the supervision of the market and audited institutions,and used related transactions and related guarantees to transfer benefits,resulting in the company's inability to develop.This article first studies the peculiarity of family business and the relevant theoretical basis of hollowing out.Then briefly introduced the discovery process of the target company's hollowing out behavior.Combining the case and the theoretical basis,firstly,the private gain theory of control right is used to analyze the motivation of Huaze's withdrawal of large shareholders from the listed company,and then the combination of equity checks and balances and information asymmetry theory is used to analyze the reasons why the family's large shareholders can successfully empty the listed company.It was found that the hollowing out of the large shareholders of the family business caused huge damage to the interests of listed companies and small and medium-sized shareholders.The rapid development of family businesses in China,therefore,hollowing out large shareholders of family listed companies is not only not conducive to the development of listed companies,but also has serious harm to the development of the Chinese economy.Therefore,this article takes the prevention of the large company shareholders from hollowing out the listed company as a starting point,combined with the ownership structure of the company when Huaze retires the large shareholders,the interest correlation between family members and executives,and the motivation for the large family shareholders to hollow out suggest.The study found that for non-self-owned listed family companies,the interests of the family and the company are not uniform.Due to the financial goals of the family listed company are not to maximize the value of the company,it pays more attention to the family's own interests.And the non-enterprise family business is not founded by family,so it doesn't pay attention to whether its reputation is damaged.Therefore,once a listed company has a crisis or a family-owned group needs financial support,family members will choose to invade the interests of the listed company based on their own interests.Compared with general enterprises,family enterprises are controlled by families,and their corporate governance and ownership models are also different from those of ordinary enterprises.The family has the absolute control to the enterprise and most of the company's important management positions are held by family members.The company's cross-employment situation is serious.And due to the special nature of family businesses,the close relationship between family and company executives makes related parties transactions and other means more hidden,which makes it easier for family members to implement private benefits of control.According to the characteristics of the family business and the motivations and causes of the large shareholders' hollowing out of the listed company,the paper will make some relevant suggestions.Due to its unique characteristics,the status and power of the major shareholder of the family have become more stable,and the ownership and decision-making power of the company have been tightly held by the family.These conditions have brought convenience to the family and made the behavior of the family's major shareholders occupy listed company funds more secret.The absolute control of the major family shareholders has severely damaged the governance structure of the family story,making it easier to hollow out listed companies.Starting from the peculiarity of family business,this paper finds that family business' s special financial goals and governance structure are different from that of general listed companies,making it more prone to interest encroachment.Taking this angle as the breakthrough point and combining with specific cases,this paper makes an in-depth study on the tunneling of listed companies by large family shareholders.Moreover,this paper analyzes the motivation of the family's major shareholders' tunneling from the special perspective of private benefits of control rights,and combined with the representative example of Huaze withdrawing major shareholders' tunneling.Therefore,this article reflects more directly the causes and consequences of the hollowing-out of major shareholders of family listed companies in our country.