| Equity concentration,as a common phenomenon in China’s capital market,poses a challenge to the effectiveness of corporate governance of listed companies,leading to the second type of principal-agent problem,which is the behavior of major shareholders using their advantageous position to encroach on the interests of small and mediumsized shareholders,thereby hollowing out the company.Meanwhile,related party transactions have gradually become one of the means for major shareholders to empty listed companies due to their concealment and ease of operation.As a star stock that focuses on the concept of environmental protection on the Growth Enterprise Board,Sanju Environmental Protection’s market value once exceeded 50 billion yuan.However,behind its high growth performance,its business model is highly dependent on related party transactions,which provides an opportunity for major shareholders to tunnel the company while increasing corporate income.This article studies the case based on three dimensions: the causes,means,and economic consequences of the use of related party transactions by major shareholders of Sanju Environmental Protection.In terms of causes,this article,starting from the perspective of private interests in control rights and internal and external supervision,believes that the special equity structure and high equity pledge rate of Sanju Environmental Protection deepen the degree of separation between the two rights,reduce the cost of tunneling,superimpose the financial difficulties of other major shareholders,and trigger tunneling motivation;Unbalanced internal governance,imperfect information disclosure systems,failure of third-party auditors to perform their duties diligently,and low violation costs further induce tunneling.In terms of means,this article believes that Sanju Environmental Protection conceals related party purchases and sales through the establishment of industrial funds,and transfers funds to related parties of major shareholders in the form of accounts receivable and prepayments;At the same time,the major shareholders of San Environmental Protection also transfer a large amount of cash to their affiliated companies through high-priced related party mergers and acquisitions to replace inferior assets.In terms of economic consequences,this article analyzes the short-term impact of two related party transactions that were exposed on the stock price of San Environmental Protection through the event study method.It is believed that both events have had a negative impact on the stock price of San Environmental Protection,but the impact of the second event is weaker than that of the first one;Through the financial indicator analysis method,this article focuses on the comparison of Sanju’s net cash ratio,quick ratio,and accounts receivable turnover ratio with peers from 2015 to 2020,as well as the trend of changes in Tobin’s Q and Z values.It is believed that related party transactions under the control of major shareholders have seriously damaged Sanju’s operating status and significantly increased its financial risks.Finally,this article proposes case suggestions for improving internal governance mechanisms and strengthening external identification and supervision to reduce the probability of such incidents occurring again. |
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