Research On The Path And Consequences Of Tunneling On The Perspective Of The Double-sided Participation Of Major Shareholders In M&A With Private Placement

With the rise of mergers and acquisitions and the positive guidance of relevant policies,private placement has gradually become a popular means of mergers and acquisitions in the capital market.However,the special two-stage property of "private placement + mergers and acquisitions" undoubtedly aggravates the phenomenon that major shareholders use high fixed increase discount rate and high M&A premium rate to realize tunneling.The aggravation of the benefit encroachment of major shareholders cannot be separated from the strong assist of the important role of " value adjustment machanism",value adjustment machanism has evolved into a weapon to aggravate the "three highs" phenomenon of "high valuation,high premium and high goodwill".As a result,the performance of the target enterprise changes dramatically after the end of the gambling period,the listed company sets aside a large amount of goodwill impairment and other behaviors,and even breeds the behaviors of major shareholders illegally occupying the company’s funds and choosing opportunities to reduce their stock holdings for arbitrage,which undoubtedly intensifies the second type of principal-agent conflict.Although there are abundant achievements in the existing literature on the influence of value adjustment machanism on the financial performance of the target firm and the influence of major shareholders’ participation in private placement or merger and acquisition,few literatures pay attention to the performance changes of the target firm in different stages of gambling.And the major shareholders in the double-sided participation of private placement merger and acquisition,the behavior of the major shareholders at different stages and the economic consequences.Based on this,this paper selects the merger and acquisition of BBHI of Shuzhi Technology as the study case.Based on the situation of major shareholders participating in the private placement merger and acquisition with double correlation,it takes the whole process of the implementation of the value adjustment machanism as the framework to explore the changes of the financial performance of the target firm during and after the gambling period.It also measures the extent of the transfer of long-term and short-term interests of the major shareholders,so as to further understand the relationship among the value adjustment machanism,the performance change of the underlying firm and the tunneling of the major shareholders.Through the case study,this paper finds that: first,the influence of the value adjustment machanism on the financial performance of the target firm has the characteristics of time structure,that is,the incentive effect of the value adjustment machanism will continue to weaken with the passage of time,and the incentive effect will disappear after the gambling period.Second,it reveals the special performance of major shareholders’ double-sided participation in private placement M&A,that is,major shareholders are more inclined to increase the acquisition premium to deliver benefits than hollowing out by lowering the private placement price.The third is to clarify the path and economic consequences of the major shareholders using the Value adjustment machanism to tunneling in different stages of the gambling.Therefore,in order to further prevent major shareholders from tunneling,this paper,aiming at the problems existing in each stage of gambling,suggests that the listed company should conduct a full investigation and analysis of the merger target when signing the value adjustment machanism,select a highly reputable asset evaluation agency to evaluate the underlying asset,and appropriately extend the gambling period or set up an additional performance protection period,and strengthen the enterprise’s internal control management;It is suggested that regulators focus on mergers and acquisitions with high premium in the market,the relationship between major shareholders of listed companies and asset evaluation institutions,and improve the disclosure system of major shareholders’ reduction.It is suggested that investors should pay attention to the motivation of private placement M&A,the internal governance of enterprises,as well as the frequent changes of the financial data of the target company during and after the gambling period,so as to rationally treat the high premium M&A of enterprises.