Research On The Behavior And Economic Consequences Of Interest Appropriation By Entertainment

After entering the 21st century,the ownership structure of Chinese companies generally presents the characteristics of centralization,the focus of analysis of corporate agency issues has shifted to the issue of usurpation of interests between major shareholders and small and medium-sized shareholders.In recent years,the frequent occurrence of usurpations of major shareholders’ interests in China’s capital market has not only damaged the legitimate rights and interests of small and medium-sized investors,but also affected the long-term development of companies.Although a series of policies introduced by the regulatory authorities have been effective in protecting the interests of small and medium-sized investors,by analyzing the announcement of administrative penalties for misappropriation of the interests of major shareholders,their cases found that the means of misappropriation of the interests of major shareholders become more complex and hidden in recent years,making it difficult for this behavior to be detected in a timely manner and the economic consequences are more serious.Therefore,it is necessary to conduct an in-depth study on the misappropriation of the interests of major shareholders.This article selects Tianrun Digital Entertainment as the subject of study,analyzes in depth the misappropriation of interests committed by its major shareholder,discusses the economic consequences of this event for the company,and makes recommendations to prevent the occurrence of misappropriation of interests by major shareholders.This article first reviews the research results of domestic and foreign scholars on the behavior of interest encroachment;Secondly,it reviews the interest encroachment incidents of Tianrun Digital Entertainment,deeply analyzes the methods of interest encroachment and the prerequisites for the successful implementation of interest encroachment.The study finds that the major shareholders mainly use three ways to implement benefit appropriation,namely,illegal guarantee,capital appropriation and equity pledge.The relatively concentrated shareholding structure,ineffective shareholders’ meeting,control of the board of directors by major shareholders,inadequate performance of independent directors,weak capacity of the supervisory board,ineffective implementation of internal controls and inadequate external supervision have facilitated the implementation of misappropriation of interests by major shareholders Then,this paper analyzes the economic consequences of the disclosure of interest encroachment on Tianrun Digital Entertainment: The outbreak of interest encroachment has brought negative market reactions,resulting in negative media reports and a sharp increase in litigation cases,which have greatly impacted the company’s image and ultimately damaged the overall financial performance of the company;The interest encroachment behavior of major shareholders of Tianrun Digital Entertainment not only directly harms the interests of small and medium-sized shareholders,but also has a significant impact on the long-term development of the company.Therefore,this paper proposes countermeasures to prevent the encroachment of interests of major shareholders from two aspects: enhancing internal governance capacity and strengthening external supervision and management: On the internal side,to prevent misappropriation of interests by building a mechanism of equity checks and balances,improving the corporate governance structure,improving the internal control system and enhancing the participation of small and medium shareholders.On the external side,the main purpose is to prevent such incidents by strengthening the penalties for violations and enhancing the role of media monitoring.Through the study of this paper,this paper expects to enrich the case study results related to the misappropriation of interests by major shareholders,and enhances the understanding of various stakeholders about this behavior.This paper also plays a positive role in preventing the occurrence of misappropriation of interests by major shareholders,safeguarding the legitimate rights and interests of minority shareholders and promoting the improvement of the corporate governance system.