| The conflict of the interest between the major shareholders and the minority shareholders (second type of the agency problem) has replaced the conflict of the interest between managers and shareholders (first type of the agency problem) became the main research questions in the field of corporate governance. Many literatures in recent years carried out a study of the second type of the agency problem "tunneling" phenomenon. However, the major shareholders will not only implement "tunneling" behavior but also adopt "propping" measures in order to make their own benefit function to the maximized;"tunneling" behavior and "propping" behavior exists simultaneously. Therefore, in this paper, we will study "tunneling" behavior and "propping" behavior from the new perspective of daily related party transactions at the same time, and use "Gross Margin" and "Transaction Cost" as new measure variables of "tunneling" behavior and "propping" behavior. First, we will prove the existence of "tunneling" effect and "propping" effect of daily related party transactions. Further, we will explain and analyze the affecting factors of "tunneling" behavior and "propping" behavior deeply and systematically so as to put forward reasonable proposals to strengthen government regulation, improve corporate governance and improve investor protection.The research idea of this paper is as follow:by reading a large number of literatures, we find that previous studies have mainly focused on the existence of the major shareholders’"tunneling" behavior, the means of "tunneling", and the impact of "tunneling" behavior on the value of the company, relatively, few literatures study "propping" behavior of the major shareholders and the reason of "propping". However, with the deep development of the people’s understanding, many studies have found that the major shareholder will not only implement "tunneling" behavior, in certain cases, they also use their owned resources or their controlled resources to adopt "propping" measure, and "tunneling" motivation and "propping" motivation exist oppositely. Based on the above analysis, this paper first explains and analyzes the relevant theoretical basis of "tunneling" behavior and "propping" behavior such as principal-agent theory, private benefits of control theory and transaction cost theory. Secondly, this paper analyzes daily related party transactions of listed company and motivation of "tunneling" behavior and "propping" behavior, and put forward the hypothesis. Thirdly, the paper analyzes the impact of internal and external governance mechanisms on "tunneling" behavior and "propping" behavior, and put forward the hypothesis. Lastly, in this paper, we select daily related party transactions of Shenzhen main board listed companies in China during2009-2011as study samples to test the proposed hypotheses empirically and draw conclusions.The research content of this paper is organized as follows:Chapter1:Introduction. This chapter begins with the background and significance of this research, and then elaborates the research ideas, basic research methods, and concludes the main contribution of this paper and shortcomings.Chapter2:Literature Review. This chapter sorts and reviews the relevant literature both foreign and domestic. Including "tunneling" behavior of the major shareholders of the listed company、"propping" behavior of the major shareholders of the listed company、"tunneling" effect of daily related party transactions and "propping" effect of daily related party transactions.Chapter3:Theoretical Analysis and Research Hypothesis of "tunneling" behavior and "propping" behavior. This chapter first describes the relevant theoretical basis of "tunneling" behavior and "propping" behavior such as principal-agent theory, private benefits of control theory and transaction cost theory. Subsequently, this chapter analyzes daily related party transactions associated with the "tunneling" and "propping" motivations of the major shareholder of listed company and make the research hypothesis. Finally, this chapter analyzes company governance associated with "tunneling" and "propping" behavior of daily related party transactions and put forward the hypothesis.Based on the above analysis, the paper proposes six hypotheses:(1) the more daily related party transactions occur, the less gross margin of listed companies. Daily related party transactions have "tunneling" effect.(2) The more daily related party transactions occur, the less transaction cost of listed companies. Daily related party transactions have "propping" effect.(3) Ownership concentration will both strengthen "tunneling" effect and "propping" effect of daily related party transactions of listed companies.(4) The effectiveness of independent director’s function will weaken "tunneling" effect of daily related party transactions of listed companies, and strengthen "propping" effect of daily related party transactions of listed companies.(5) Legalization process will weaken "tunneling" effect and "propping" effect of daily related party transactions of listed companies at the same time.(6) Degree of product market competition will both weaken "tunneling" effect and "propping" effect of daily related party transactions of listed companies.Chapter4:Empirical Research Design. In this chapter, we select daily related party transactions of Shenzhen main board listed companies in China during2009-2011as study samples; finally we get956valid data and carry on the descriptive statistics to the annual distribution of the data information. Then, this chapter designs two regression models according to the article’s hypotheses to make empirical regression test and gives the definition description of the variables in the model.Chapter5:Research Results and Empirical Analysis. This chapter begins with the research variables descriptive statistical analysis and correlation analysis, followed by multiple regression analysis. First of all, we make empirical regression of model1and model2respectively to prove the "tunneling" effect and "propping" effect of daily related party transactions. Then, we group (high ownership concentration group and low ownership concentration group, high effectiveness of independent director’s function group and low effectiveness of independent director’s function group, high level of legalization group and low level of legalization group, high degree of product market competition group and low degree of product market competition group) regression model1and model2again to study the impact of internal and external governance mechanisms on "tunneling" effect and "propping" effect.Chapter6:Conclusions and Inspiration. Through research and analysis, the main conclusions of this paper are:(1) daily related party transactions have both "tunneling" effect and "propping" effect. Through regression analysis, this paper finds that the daily related party transactions of listed companies are negatively related with gross margin, daily related party transactions have "tunneling" effect; the daily related party transactions of listed companies are negatively related with transaction cost, daily related party transactions have "propping" effect.(2) Ownership concentration will both strengthen "tunneling" effect and "propping" effect of daily related party transactions of listed companies. Through a comparative analysis of grouped regression results, the paper finds that "tunneling" effect and "propping" effect of the major shareholders are more pronounced when the higher proportion of equity owned by the largest shareholder.(3) The effectiveness of independent director’s function will weaken "tunneling" effect of daily related party transactions of listed companies, but do no significant impact on "propping" effect of daily related party transactions of listed companies. Through a comparative analysis of grouped regression results, the article finds that "tunneling" behavior made through daily related party transactions by the major shareholders of listed companies in high effectiveness of independent director’s function group is obviously weaker than in low effectiveness of independent director’s function group, showing that independent directors can curb "tunneling" behavior of the major shareholders to a certain extent. However, studies show that independent directors don’t have significant impact on "propping" effect of daily related party transactions of listed companies.(4) Legalization process will weaken "tunneling" effect and "propping" effect of daily related party transactions of listed companies at the same time. Through a comparative analysis of grouped regression results, the article finds that in high level of legalization areas, both "tunneling" effect and "propping" effect of daily related party transactions of listed companies will be weaken in a certain degree.(5) Degree of product market competition will also weaken "tunneling" effect and "propping" effect of daily related party transactions of listed companies. In this paper, a comparative analysis of grouped regression results finds that both "tunneling" effect and "propping" effect are more obvious in low degree of product market competition enterprises. It means that degree of product market competition will curb "tunneling" behavior and weaken "propping" effect.The main contributions of this paper are:(1) the article put "tunneling" behavior and "propping" behavior into a logical and systematical framework to research, and enrich the literature in this area of research.(2) This article is based on the perspective of daily related party transactions to study the motivation of "tunneling" behavior and "propping" behavior implemented by the major shareholders and influencing factors of corporate governance mechanism.(3) In this paper, we adopt "Gross Margin" and "Transaction Cost" indicators proposed by Zhen Guojian et al (2007) as new measure variables of "tunneling" behavior and "propping" behavior implemented by the major shareholders.(4) In addition to the internal governance mechanisms, we add legalization process and degree of product market competition as two new external governance factors to analyze and study the problem deeply, and it will provide empirical evidence for the improvement of capital market regulation in our country and the improvement of the level of investor protection.The main inadequacy of this article is manifested as follow:(1) this paper only study "tunneling" behavior and "propping" behavior from the perspective of daily related party transactions, and it only represents one way of "tunneling" and "propping", not comprehensive.(2) this paper just prove "tunneling" effect and "propping" effect of daily related party transactions respectively, and do not make a specific analysis of relationship between "tunneling" effect and "propping" effect.(3) The study of inflecting factors on "tunneling" effect and "propping" effect of daily related party transactions is exploratory, does not include all the inflecting factors, and some important factors may also be omitted from the outer. |
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