Case Analysis Of Tunneling Behavior From Major Shareholders Based On Sichuan Mingxing Electric Power Co Ltd

Controlling Tunneling Behaviors of Shareholders has always been a popular topic in the crossover study between finance and corporate governance at home and abroad.The agency issue between management and shareholders is the focus of early scholars.However,the focus of company governance has been transferred from the agency issue between management and shareholders to that between controlling shareholders and minority shareholders since the outbreak of the Asian financial crisis in 1997.The Concept of tunneling,proposed by Johnson,Laporta and Shleifer in 2000 for the first time,also known as "tunneling behavior" and "transfer of benefits",refers to the process of major shareholders gaining profits by encroaching on the assets of the listed company with their control over the company."Tunneling behavior" of controlling shareholders of listed companies against minority shareholders was quite common prior to the equity reform in China,having a significant negative impact on firm value and benefits of minority shareholders.Tunneling behaviors such as controlling shareholders' encroachment on funds and illegal guarantee have been contained to a certain extent with the completion of the equity reform and the issuance of relevant laws.But because the equity of listed companies in China is more concentrated,“a dominant shareholder” is quite common in addition to the serious asymmetry of information.Since the market has obtained a certain degree of oversight over circulation of non-tradable shares since the share reform,tunneling behaviors such as “tunneling cash flow” or “tunneling capital” by means of illegal acquisition of funds and connected transaction by controlling shareholders of listed companies have turned into subtle “tunneling equity” behavior,namely,“buy low and sell high” of equity in listed companies via various means and illegal exchange of interests of minority shareholders in the secondary market.Based on "Tunneling behavior" by major shareholders against Mingxing Electric Power,this paper first analyzes the common causes and methods of the short selling of major shareholders.Secondly,in combination of existing theories related to tunneling from major shareholders,this paper,based on the specific case of a listed company in the special background of China,analyzes the specific economic environment,tunneling behaviors and their economic consequences of listed companies to evaluate tunneling the listed companies from major shareholders in a more objective manner,to enable the investors to identify potential investment risks and to supervise theimprovement of the information disclosure system and the governance structure of listed companies in China further.This study has a certain theoretical significance for enriching the content of studying tunneling behaviors of major shareholders from the perspective of case study.Specifically,three key points are presented:First of all,it summarizes research results of the predecessors,applies various theoretical foundations for tunneling from major shareholders further and embodies them in each process and action in tunneling behaviors,so as to improve the theoretical basis for tunneling the listed companies from major shareholders of China.Secondly,in light of the conditions of China,it indicates the problem of tunneling the listed companies from major shareholders in the specific context,analyzes the types and means of corporate interest transmission combined with typical cases and provides reference for improving the internal governance structure and equity structure of enterprises and proposing national policies.Thirdly,this paper puts forward various means and impacts of tunneling from major shareholders by analyzing the case comprehensively without being limited to expound the relationship between tunneling and single financial data,and provides the empirical research in future with a new direction.This article is divided into five main parts.The first part,introduction,presents the background and significance of the topic with relevant literature sorted out;the second part,theoretical summary,states the theories needed for researches related with tunneling from major shareholders and transfer of benefits;the third part starts to introduce the basic status of Mingxing Electric Power,the case of this paper;the fourth part,the main body of this case analysis,analyzes the impacts of tunneling from major shareholders on Mingxing Electric Power in the aspects of reasons,approaches and outcomes;The fifth part of the conclusion and enlightenment.