Research On The Influence Factors Of Tunneling By Large Shareholders

A good capital market can broad the channels of financial intermediation, enhance the efficiency of resource allocation and build up investor's confidence, but the tunneling by large shareholders has seriously prevented the sound development of capital markets, so it is urgent to protect the interests of small and medium investors after the tradable share reform in China's capital market. In this thesis, empirical research methods are used to aim at reveal the influence factors of tunneling by large shareholders from the internal governance structure and the external market environment, and in order to provide more strategies and proposals for its effective management of large shareholders.At first, principal-agent theory, property rights theory and asymmetric information theory are used in this thesis to analyze the theoretical basis of tunneling by large shareholders; The author analyzed the current situation of protection for investors in Chinese capital market and combined with the tradable share reform based on the LLSV model. Then, on the basis of the China's A-share listed company's annual report in 2006-2008, empirical tests have proved the internal governance structure and the external market environment's impact on tunneling by large shareholders. The results showed that the proportion of major shareholders was positively correlated with the tunneling by large shareholders while the second to the tenth largest shareholder equity ratio are negatively, and the proportion of independent directors did not show a correlation, which originated from the effectiveness of independent director system didn't put into great play in China. Meanwhile, the tunneling by large shareholders in state-owned enterprises are significantly reduced than non-state-owned enterprises; in the external market environment, the degree of government intervention in the interests of large shareholders convey negative correlation, it is a pity that the influences from the extent of the market legal system didn't support the hypothesis. Finally, combining with the theoretical and empirical conclusions, it is suggest that in order to avoid the tunneling by large shareholders we should improve the equity structure and accelerate the building of the independence director system, and improve the construction of investor protection regime.