On The Tunneling Through Related Transactions

Related transaction has two sided.On the one hand,it saves the cost of economic behavior,and saves a lot of time of finding the objects of transaction and negotiating.On the other hand,the unfair transaction prices and unfair competition methods in related transactions make it easy to become a means of whitewashing financial statements.Since China's IPO system is more specific than European and American countries,the listed company's shareholding structure is very concentrated,and the regulatory system needs to be improved.Therefore,the problem of interest transfer is more serious,and related party transaction is the main means,which damages the company's value and infringes upon it.The immediate interests of small and medium investors.In China,related transaction is a common phenomenon.In recent years,China's economy has continued to develop,and research has found that the number of corporate economic activities has also increased.In 2013~2017,the number of related transaction in listed companies in China has shown an upward trend.Since the phenomenon of related transaction is widespread in most enterprises,it has facilitated the transfer of related transaction and has attracted the attention of the market.The securities market is constantly developing,the number of listed companies is increasing,the development tends to be perfect,and the number of interest transmissions under related transaction is also increasing,with the number of cases reported by the stock exchange and major media reports constantly exploding.Out,the investor's investment enthusiasm has been greatly suppressed.After the disclosure of “Accounting Standards for Business Enterprises No.36 – Related Party Disclosure”,the situation of unfair related party transaction has been improved,but the company has also adopted It is necessary to deal with certain strategies and conceal the operation.Therefore,it is necessary to transfer the benefits of related transaction.On the basis of literature research,this paper mainly adopts case study method.Firstly,this paper introduces two enterprises involved in related party transactions,whose names are Grand Holding Company and Grand Trade Company,and explains the related transaction scheme and process.Then,based on the case of Grand Holding,this paper tries to reveal that through the analysis of the specific forms of related party transactions,combined with performance commitment scheme and performance compensation scheme,the listed companies have the risk of being occupied and tunneling under the related party transactions.This paper focuses on the analysis of the means,motivation and economic consequences of tunneling.It not only tries to evaluate the economic consequences of related transactions of enterprises,but also want to clarify the issue of interest transmission under the related transactions of Grand Holding.Finally,it summarizes the research,draws inspiration from the case and puts forward relevant suggestions.Through the case study,it reveals that there is a suspected interest transfer behavior in the related transaction case of Grand Holding.In the short-term,after this related transaction,for the company,the company has not been able to generate financial synergies after this related transaction,but the business indicators have declined,which has a negative impact on the future development of the company;at the same time,small and medium-sized investors have caused economic losses due to falling stock prices.This paper puts forward several suggestions for improving the company's tunneling through related transactions: optimizing the company's shareholder structure,improving the company's internal supervision system,improving the market supervision system and policy and standardizing the information disclosure of related transactions and the evaluation business of asset evaluation agencies.The innovations of this paper are embodied in two aspects: first,the case analysis based on the large holding company has a strong practical role,enriches the research of interest transmission under the affiliated transaction,and provides new case evidence.Secondly,this paper studies from different perspectives,and combines the current situation of China's securities market,and puts forward suggestions to protect the interests of small and medium-sized shareholders from the perspective of capital market investment and related transactions of listed companies,which is conducive to restoring a safe environment for securities market and maintaining the stability and fairness of the market.