Research On The Motivation Of Profit Transfer Between Parent And Subsidiary Companies

The problem of profit transfer is a major focus in the field of corporate governance,previous researches about profit transfer at home and abroad mainly concentrate on the ways of major shareholders' tunneling and propping behavior of the listed company and the impact of economic consequences,while the research on the tunneling and propping behavior between the listed company and its subsidiaries has been neglected.Under the increasing supervision and punishment of the CSRC on the transfer of corporate profits,especially given China's special restructuring listed system background,and with the development of capital market,China's listed companies to disperse strategic operational risks and overcome cross-regional operational obstacles have shown a trend of diversified development,forming enterprise groups headed by listed parent companies.If the listed parent company using control relationship to channel hidden profits with its subsidiaries,certainly will increase the difficulty of the CSRC regulation.Therefore,it is necessary to try to study the motivation factors of profit transfer between the listed company as the group's parent company and its subsidiaries,so as to supervise the profit transfer behavior between the parent company and its subsidiaries from the source for the CSRC and other regulatory authorities,and to enrich the existing research literature on profit transfer.This paper creatively measures the profit transfer from the changes in the net profit attributable to the parent company representing the interests of the shareholders of the listed parent company and the profits and losses of the minority shareholders representing the interests of the minority shareholders of its subsidiaries according to the consolidated income statement of the new enterprise accounting standards no.33 in 2007,and mainly researches the following questions:(1)find the evidence of profit transfer motivation between the parent company and its subsidiaries;(2)what are the relevant factors affecting the motivation and the economic consequences of profit transfer between the parent company and its subsidiaries.In view of the shortcomings of existing literature research at home and abroad in the field of enterprise profit transfer,this paper takes the listed parent company and its subsidiaries as the entry point,on the one hand,through literature review and theoretical analysis,expounds that the listed parent company has the ability and motivation to carry out the profit transfer by its subsidiaries based on the control right advantage,thus puts forward the influence mechanism of the profit transfer motivation on the tunneling or supporting behavior of the profit transfer,and fully explains the influence mechanism and then puts forward the hypothesis,and fully explains the influence mechanism and then puts forward the hypothesis.On the other hand,this paper selects the data from A-share non-financial and non-insurance listed companies on Shanghai and Shenzhen Stock Exchanges from 2007 to 2018,finds that the stronger incentive to avoid delisting and the more equity pledge the listed parent company has,the more likely it is to transfer the supportive profits by its subsidiaries to itself,while the results of refinancing and equity incentive incentives are not significant;compared with non-state-owned companies,the stateowned listed parent company has more significant incentive to avoid delisting;among the listed parent companies with more subsidiaries,the motivation to avoid delisting and equity pledge is more obvious;the lower degree of separation of two rights of the listed parent company,the more significant incentive to avoid delisting.Further,the test finds that institutional investors,the big four and analysts' attention have a inhibitory effect on the listed parent company's motivation to avoid delisting,and the subsidiary's supportive profit transfer to the listed parent company all improves the enterprise value in a short term.Finally,based on the research results of this paper,the following policy suggestions are put forward :(1)optimize the internal shareholding structure of listed companies;(2)make the external supervision mechanism of listed companies more perfect;(3)improve the capital market information disclosure system.