On Tunneling Behavior Of Controlling Shareholder In YJCM Company

Tunneling refers to the behavior of controlling shareholders using their control over listed companies to transfer corporate interests.Although China has issued a series of laws and regulations to curb tunneling,tunneling behavior still exists due to its concealment and diversity.The tunneling behavior of controlling shareholders will not only damage the value of the listed companies,but also infringe the rights and interests of minority shareholders and undermine their confidence in participating in the capital market.Related transactions are widely used in tunneling.Although in general equity pledge and transaction are normal functions of the capital market,but the increasing degree of separation between the two rights will strengthen the tunneling motivation of the controlling shareholders.By taking advantage of information asymmetry and other advantages,the controlling shareholders conduct a large number of pledge and reduction under the tunneling motive,transfer the risk of the stock market completely,obtain a large amount of cash and still maintain the control of the listed companies.They are also important ways to tunneling the listed companies and create conditions for subsequent tunneling.The existing literatures on tunneling behavior are dominated by empirical research,and few literatures analyze specific cases.Therefore,it is of positive theoretical and practical significance to study the tunneling case,analyze the causes,methods and consequences of tunneling behavior,and put forward suggestions on governance of tunneling behavior,so as to promote the fairness of the capital market and the legitimate rights and interests of stakeholders.This paper takes the tunneling behavior of Mr.Xiao,the controlling shareholder of YJCM as the case study object,introduces the basic situation,business environment and existing problems of YJCM,and analyzes Mr.Xiao’s tunneling behavior,which mainly includes pledge of shares,reduction of stock holdings and connected transaction.The tunneling motivations are as follows: the listed company’s single largest shareholding structure facilitates the tunneling of controlling shareholder;tunneling cost is very low compared with tunneling income;the controlling shareholder has a certain capital demand;transfer stock market risks and choose when the market is good tunneling motivation.This paper studies the influence of tunneling on the value of listed companies and stakeholders by analyzing the changes of stock prices and financial data before and after tunneling.Based on the analysis of the case,this paper puts forward the following suggestions: strengthening the supervision of backdoor listed companies;strengthening the supervision of suspension of listed companies;improving the equity pledge management system;standardizing related party transactions;introducing institutional investors to balance controlling shareholders.Through the study of the case of YJCM,this paper comes to the following conclusions: the tunneling behavior of the controlling shareholder of the listed company has greatly damaged the value of the listed company,and at the same time has damaged the rights and interests of the minority shareholders,the pledgee and other stakeholders while making himself obtain huge profits.The innovations of this paper are that it proves that after the private media enterprises are listed on the small and medium-sized board backdoor listing,the controlling shareholder will tunneling the listed company by means of equity pledge when the stock market has a high expectation for the company;the controlling shareholder can quickly realize his stock rights by means of massive pledge and stock reduction during the suspension period,and there is an obvious timing behavior.