Annual Report Inquiry Letter、Tunneling Of Major Shareholders And Internal Control

In the past few years,the domestic capital market has experienced a fast-paced growth,the tunneling behavior of major shareholders in listed companies such as FUREN Group Pharmaceutical,Kangde,Yan’an Bikang and so on frequently occurs.The tunneling of major shareholders is often accompanied by major internal control defects of enterprises.Major shareholders can take advantage of the weaknesses in a company’s internal control system to engage in tunneling,and the company’s internal control defects become more severe as major shareholders engage in tunneling.In order to solve the problems that the traditional information disclosure system has been unable to keep up with the changes in the market environment and the increasing asymmetry of information between listed companies and investors,China’s regulatory system has been constantly innovating.Since the reform of the information disclosure express train implemented by the Exchange in 2013,the regulatory focus has shifted from prior review to post-supervision.The supervision in the form of annual report inquiry letter will gradually break the information barrier between major shareholders and small and medium-sized shareholders,It can restrain the tunneling of major shareholders and improve the quality of the company’s internal control.Therefore,exploring the relationship between the annual report inquiry letter is of utmost importance,major shareholder tunneling and internal control for the improvement of the regulatory system.In this paper,Antong Holdings,which received the inquiry letter of the annual report of the exchange due to the tunneling of major shareholders,is selected as the research object,and the case analysis method is selected.The study found that the majority shareholders of Anton hollowed out the company by means of non-operating capital occupation,illegal guarantee,related party transactions and other means.Then,based on the perspective of internal control,this paper analyzes the causes of tunneling behavior of major shareholders from the perspective of five elements of internal control.Then it analyzes the governance effect of the annual report inquiry letter on the tunneling of major shareholders.It is found that the annual report inquiry letter can inhibit the tunneling of major shareholders through regulatory functions,market supervision,reputation pressure and other channels,and after receiving the annual report inquiry letter,the company’s operating performance and short-term market value have decreased.At the same time,since Antong Holdings still has the problem of major shareholder tunneling after receiving the annual report inquiry letter,the Shanghai Stock Exchange requires the company to put forward effective measures through the annual report inquiry letter,so as to improve the company’s internal control quality.Finally,the research conclusions are drawn and relevant suggestions are put forward.The contribution of this paper is to explore the relationship between the annual report inquiry letter,major shareholder tunneling and internal control from specific cases,which has certain theoretical significance and practical value for protecting the rights and interests of small and medium-sized investors,improving the quality of the company’s internal control,improving the regulatory policy of the exchange’s annual report inquiry and promoting the sound development of the domestic capital market.