Analysis On The Behavior Of Related Party Transaction Tunneling In NVC Company

Private enterprises are an important part of China's market economy and the basis for economic and social development.The number of private enterprises accounts for more than 70% of the total number of companies,and the proportion of private listed companies is also increasing.However,the ownership structure of most private listed companies is unreasonable and the control power is highly concentrated.There are a series of problems in corporate governance.These problems have not been resolved in a timely manner,giving large shareholders the opportunity to infringe on the interests of small and medium shareholders.After the time has passed,the harm has become increasingly apparent.In all ways,connected transactions are considered to be one of the most commonly used methods for tunneling by large shareholders.This method of encroaching on the interests of minority shareholders through connected transactions has also attracted the attention of experts and scholars.When related-party transactions become a tool for large shareholders to infringe interests,they also have serious consequences.Not only is the listed company's operating capacity reduced,its shareholders' interests are being impaired.What's more serious is the prevailing market speculation and investors' loss of confidence,which has had a great impact on the orderly and healthy development of the capital market.To ensure that China's securities market operates in accordance with the rules,it has become a problem that must be solved to curb the use of related transactions by major shareholders to tunnel excavation.In this context,NVC company was selected as the research object in this paper.In the process of NVC company's transformation from a privately-owned private enterprise to a listed company,the founder has been continuously diluted for obtaining equity capital.Although he is unable to achieve absolute control over the company according to the proportion of shares held,he is a founder and executive director.The person's identity has a significant impact on the company's business decisions and becomes the person who has actual control over NVC company.In addition,NVC company as a private company inevitably with the color of the family company,which makes the possibility of the occurrence of connected transactions tunneling,and due to the actor's large shareholders and managers of dual status,highlighting the control of insiders of large shareholders problem.This article mainly carries out normative research.In the process of writing,based on corporate governance theory,internal control theory,and supervisory control theory,combined with NVC company cases in the lighting industry caused by associated transaction tunneling behavior,in-depth mining leads to NVC company tunnel The deep-seated reason for the behavior,and based on this as a basis for exploring the suggestions for the prevention of the behavior of private listed companies' related party transactions.This article mainly adopts literature research method and case analysis method.For the first time,on the basis of consulting a large number of domestic and foreign literature and research results,this paper provides direction guidance and theoretical basis for the case analysis of this article;secondly,it takes the incident of NVC tunnel transaction as the research object,as it has typical private enterprises.The characteristics are therefore representative and typical.The biggest innovation of this paper is based on the research of the predecessors.It summarizes the influencing factors of the tunneling behavior of related party transactions,and adds two factors: the behavioral person's motivation and the moral quality,which makes the analysis of the tunneling behavior of related party transactions more thorough.Through analyzing,it is considered that there are many reasons for the occurrence of NVC company's tunneling.First of all,there are problems with the governance structure: the chairman of the board as the CEO leads to the lack of checks and balances of power;the independent board of directors and the audit committee are in name only,and they do not play a real supervisory and managerial role;the management staff's setup is unreasonable and there is a phenomenon that the controller is nepotism.Second,NVC company's internal control system is not perfect.The internal control system did not form a document,leaving the company operating without institutional standards,resulting in a series of internal control deficiencies;the review procedures for related transactions were incomplete,and the perpetrators could directly cross the board for transactions;internal information exchanges were in dire straits and lack of superiors and inferiors.The information transmission channel between the parent company and the parent company;the weak establishment of the enterprise system and the lack of awareness of the manager's rules.Furthermore,for the benefit of the family-owned company,it is plunged into a debt crisis because of gambling.These have become the motives for the controller to implement the related-party transaction tunnel.Finally,the level of external governance is insufficient.The legal requirements for the disclosure of affiliation and transactions are not strict,the definition of affiliation is not clear,the scope of stipulations is narrow,and the information disclosed in the contents of related transactions is too small.The lack of co-regulatory supervision between the mainland and Hong Kong regulatory authorities has made it difficult for related parties to identify,which makes the regulatory environment of red chip listed companies more relaxed.The accounting firm's failure to perform diligent duties has caused the long-term undiscovered behavior of the connected transaction tunnel.Private enterprises do not have the abundant resource advantages like state-owned enterprises,and the process of growth is particularly difficult.While leveraging the capital market to become bigger and stronger,it is necessary to prevent the controller from excavating tunnels and protect the interests of investors.Finally,it is concluded that the prevention of privately-owned listed company's connected transaction tunnels not only needs to improve the external governance level,especially the improvement of the internal control system,but also needs to eliminate the motives of the actor and strengthen the ethical quality of the managers to reduce the influence of uncontrollable factors.