Research On The Tunneling Effect Of Listed Companies' Guarantees For Controlling Shareholders And Their Related Parties

In recent years,there have been more and more cases in China that listed companies’ controlling shareholders used related-party guarantee to transfer benefits,and the trust crisis of listed companies has attracted widespread attention from many investors.Due to the highly concentrated ownership structure of listed companies in China,listed companies usually have controlling shareholders,and the shares held by controlling shareholders are non-tradable shares.The agency problems of such listed companies mainly exist between controlling shareholders,small and medium shareholders.The large shareholders of the company generally use the pyramid structure or cross-shareholding model to separate the cash flow rights and control rights.Once the control rights are greater than the cash flow rights,the controlling shareholders will tend to encroach on the interests of small and medium shareholders to increase their own income.The major shareholders need to pay the corresponding costs in order to obtain control of the listed company,which mainly includes the consideration paid for the purchase of shares,the energy paid to participate in the management company,the lost opportunity cost,and the risks they bear.Under normal circumstances,shareholders can only enjoy the residual claim rights of the company’s profits,but this usually cannot make up for the costs and risks borne by the major shareholders,and the major shareholders will actively seek control benefits.This article only focuses on Shanghai and Shenzhen A-share listed companies that provide guarantees.The study utilizes case study and empirical analysis to explore the characteristics and influencing factors of related guarantees of listed companies in China.The research conclusion of this paper is that the relationship between providing related guarantees and company value for the controlling shareholder and its related parties is non-linear.If the company overdraws its credit assets to provide guarantees to related parties over a certain degree,it will produce a tunnel effect and reduce the market value.However,when the listed company provides guarantees within its own stable and moderately controllable range,it will not damage the company’s value,or even Reducing market friction and transaction costs is conducive to the company’s development.