The Empirical Study On The Supervision Of "Tunneling" Behavior From The Independent Audit Perspective

In the development process of domestic stock market,there are many illegal operations,such as false statements,insider trading,market manipulation,unauthorized use of funds etc.But what is the most worrying is "Tunneling" behavior of listed companies."Tunneling" behavior,also known as "hollowing out" phenomenon,is that majority shareholder by virtue of voting rights creates private gains against minority shareholders interests through various means such as non-public securities,asset transfer,the use of transfer pricing for internal transactions.With the increasing number of negative effects brought by "Tunneling" behavior,whether the various monitoring tools including independent audit effectively identify and guard against "Tunneling" behavior of listed companies by majority shareholder becomes a hot topic at home and abroad.Draw on previous research,this paper,first of all,summarizes "Tunneling" behavior by majority shareholder and the supervisory role of independent audit in theory,and then carries out an analysis of the relationship between "Tunneling" behavior and the supervisory role of independent audit from the audit perspective.Based on the date about Chinese A share listed companies over period 2002-2007,this paper investigates the relationship between ownership structure,a proxy for the degree of investor protection,and controlling shareholder embezzlement of listed companies funds,a proxy for tunneling.The results show:the more heavily expropriated by the large shareholders,the higher likelihood for companies to choose the auditors known for quality auditing reports to reduce the agency costs.In addition,independent audit can play a role in fully reflecting and effectively supervising "Tunneling" behavior by majority shareholder in emerging markets such as China.Finally,based on theoretical analysis and empirical results,this paper argues that economic instruments should be combined with administrative intervention and the former should be the main means.The measures should be taken from the three aspects improving the external system, strengthening the external monitoring,and optimizing the corporate governance to change the choice of major shareholder,which can Fundamentally curb "Tunneling" behavior,keep stock market healthy and stable.This study,both in theory and in practice,is of great importance.In theory,this paper, studying the relationship between "Tunneling" behavior and the supervisory role of independent audit,is a supplementary examination to the principal-agent theory,which contributes to the study of theory of corporate governance in depth,solves agent problem in China's listed companies,and also helps to reduce agency costs and improve operational efficiency of capital.In practice,this article provides data to improve the system which protect the rights and interests of minority shareholders,conducive to meet the needs of minority shareholders to understand and safeguard the legitimate interests of their own and to curb "Tunneling" behavior.In addition,the supervision of listed companies can meet the Department's monitoring needs,make the relevant departments improve the market economic order,provide the basis for the development of effective laws and regulations.