Ownership Structure,related Party Guarantee And Tunneling

In China, the listed company's external guarantee has been of great concern to investors and regulators, especially for the related party guarantee of company provided, that not only affects the normal operation and management of listed companies seriously, and even leads to bankruptcy, withdrawing from stock market. In addition, the complex guarantee relationship between the companies cause a "domino effect", which will be amplified the risk of a single company rapidly, and then increased the risk of stock market. However, the generation of this phenomenon and "one controlling shareholder" of the ownership structure are inseparable in our country. Shareholder's controlling for company bring about the separation of cash-flow and control rights, and in order to seek private benefits of control, so controlling shareholder have motivation and ability of expropriation from the listed company, in fact, the related party guarantee is a way of tunneling for controlling shareholder in China. Therefore, to examine the relation of ownership structure and related party guarantee, firstly, this study reviews and sums up several domestic and foreign literatures, then presented research focus. Secondly, we analyze their current situation and characteristics, and on this basis for further empirical research. In this paper we choose the size and the likelihood ratio of loan guarantees, under the different ownership arrangement, to research the influence of the degree and preferences of the tunneling. In addition, we also analyze the effects of different types of ultimate controlling shareholders, the conclusions as shown:①The size of loan guarantees first decreases, then increases, and finally decreases. There is a negative relationship between the holding ratio of the biggest shareholder and the likelihood ratio of loan guarantees. Therefore, the controlling shareholder in the preference of low holding ratio for tunneling, and at this time, tunneling is the worst.②Two types of ultimate controlling shareholders both have chance to expropriate listed companies through related party guarantees. The probability of guarantee behavior of state-owned corporations is higher than that of corporations controlled by non-state.③If controlling shareholders of listed companies are group companies, the size of loan guarantees is bigger, and the ability of tunneling is stronger than non-group companies.④The size and the likelihood ratio of loan guarantees is significantly positively correlated with the company's asset-liability ratio. But company size has no significant influence for related party guarantees. Other major shareholders can not help restrain the related party guarantees. Furthermore, our legal system is not perfect, it can not effectively restrict the behavior of guarantees, and the external financial environment has not influence which in the expected.Finally, we sum up this study conclusions, from corporate governance, strengthen supervision, improve the legal system and expanding financing channels, ect, put forward some countermeasures to prevent the tunneling of controlling shareholders through the related party guarantees.