Research On The Governance Of The Major Shareholder's Hollowing Out Behavior And Its Economic Consequence

In 2013,the Shanghai and Shenzhen Stock Exchanges officially launched the information disclosure through train system,which also indicates that the regulatory focus of the exchanges has shifted from "review in progress" to "review afterwards".Accordingly,the inquiry letter system also came into being,which is an innovative regulatory model that can ask targeted questions on matters that are problematic in the announc ements of listed companies,which to a certain extent solves the problem of information asymmetry and gradually becomes one of the important regulatory tools in the capital market.With the increasing frequency of the use of questioning letters by the Shanghai and Shenzhen exchanges,the volume of questioning functions in the letters to date in relation to the issue of emptying by major shareholders has exceeded 30% of the volume of all announced questioning functions.The widespread existence of emptying b y major shareholders has aggravated the infringement on the interests of listed companies and small and medium-sized investments,seriously endangering the healthy operation of the capital market and causing bad influence on the reputation of the capital market,which is contrary to the goal of the capital market to develop in a long and stable way.So in this context,what is the effect of the inquiry letter mechanism on the governance of large shareholders’ emptying behavior? And what are the economic consequences? This study is important for the improvement of the regulatory system of capital market.To achieve the research purpose,this thesis takes Tunghsu Optoelectronic,a listed company that has received a total of eleven inquiry letters from the Shenzhen Stock Exchange within three years,as a case study,and also compares the literature related to inquiry letters and large shareholders’ emptying behavior,based on information asymmetry theory,signaling theory,reputation constraint theory,and principal-agent theory,and adopts the case study method for research Analysis.Although the actual controller of Tunghsu Optoelectronic only holds 21.77% of the equity,but its shareholding ratio far exceeds the second,third,fourth and fifth largest shareholder shareholding ratio sum.In addition,the deep stock exchange in November 19,2019 to Tunghsu Optoelectronic issued a letter,to its "2016 year first phase medium-term notes" two varieties of bond irregularities for detailed questions,and then because of the questioning letter of successive questions,Tunghsu Optoelectronic large shareholders hollow out the event also gradually surfaced in front of investors.And then through combing Tunghsu Optoelectronic ’s shareholding structure and the beginning and end of the emptying event,found its big shareholder emptying behavior to occupy funds,provide irregular guarantee and related transactions as the main way.Next,the details of the letter issued by the Shenzhen Stock Exchange to Tunghsu Optoelectronic,the governance path of the inquiry letter to Tunghsu Optoelectronics’ large shareholders’ emptying behavior and the governance effect,and the analysis of the economic consequences of the specific case.This thesis is mainly from the following six aspects to elaborate the analysis.First,in the introduction,this thesis describes the research background and the significance of this research in China’s capital market,which is mainly concerned with information disclosure and the frequent occurrence of short-selling events,and compares the previous literature on inquiry letters and short-selling behavior of large shareholders,and describes the research ideas and research methods of this thesis.The second part is related theory and theoretical analysis,which defines the basic concepts of this thesis and elaborates the four theoretical foundations involved.Third,for the case introduction part,briefly introduced the past situation of Tunghsu Optoelectronic,its main business sectors and shareholding structure;also detailed analysis of Tunghsu Optoelectronic is used what kind of hollowing out means so as to Tunghsu Optoelectronic’s interests are infringed,in order to show the current situation of the company’s major shareholder hollowing out at that time;In addition,also mentioned in the inquiry letter hollowing out the details of the behavior of a comprehensive sorting.Fourth,this thesis argues that the inquiry letter is through the four paths of securities market reaction,intermediary institutions synergy effect,play exchange control function,and reputation restraint mechanism to achieve the governance of Tunghsu Optoelectronic large shareholders’ selfish behavior;and also analyzes the inhibitory nature of the inquiry letter to Tunghsu Optoelectronic large shareholders’ emptying behavior,which not only improves the quality of the company’s accounting information disclosure,actively solves the existing emptying matters,but also puts the inquiry before and after the inquiry The analysis shows that the inquiry letter can also inhibit the big shareholder to continue to hollow out Tunghsu Optoelectronic and prevent the big shareholder to hollow out Tunghsu Optoelectronic again.Fifth,this thesis concludes that after the questioning letter passed the Tunghsu Optoelectronic large shareholder event to the market,the company’s performance situation and asset quality have declined to some extent,the audit fee level increased,the management and governance layer changed frequently,and the interests of s mall and medium investors are protected to different degrees of economic consequences.As inspired by the four governance paths in this case,recommendations are made from four perspectives.O ne,to introduce more market supervision forces to form a supervisory synergy on the emptying behavior of major shareholders,thus providing deterrent governance.Second,to urge the supervision of accounting firms,law firms and sponsor institutions to be diligent and diligent,so as to better work together to achieve better supervision of major shareholders of listed companies.Third,the flexible regulatory model of inquiry letters can be appropriately combined with administrative penalties,while maintaining close communication with intermediary structures to more comprehensively maintain the healthy and effective operation of the capital market.Fourth,the role of reputation mechanism in the governance of inquiry letters should be improved,and the reputation mechanism should be managed in combination with other me chanisms so as to organize and integrate the advantages of this management method and regulatory inquiries to fully manage the short-selling behavior of large shareholders.In summary,this thesis combines theory and practice,using specific cases to illus trate that letters of inquiry can play a suppressive role in the short-selling behavior of large shareholders,and in this regard,we have conducted an in-depth analysis to derive specific governance effects and economic consequences,based on the study of the governance of the short-selling behavior of large shareholders from the perspective of exchange letters of inquiry,and put forward some recommendations,which also provide companies with similar situations in the securities market.This will also pro vide some implications for companies in similar situations in the securities market and contribute to the improvement of the monitoring system.