Research On The Controlling Shareholders’Tunneling Behavior Of Connected Transaction

Since La Porta. Andrei. Shleifer. et al(1998) proposed the concept of Tunneling when they analyzed the act that controlling shareholders occupied the interest of minority shareholders, many scholars studied the phenomenon from different angles. In recent years, analysts pointed out that the tunneling behavior of the controlling shareholder has a direction, the input and output tunneling behavior, corresponding to the controlling shareholders encroach and input the interests of listed companies.For our specific situation, China’s domestic scholars pointed out that China’s capital market is showing two characteristics. one is listed companies ownership concentration. The other is the backward of legal construction of the protection of the interests of minority investors. This situation led the act that the controlling shareholders occupy the interests of minority shareholders has became common behavior. In the specific way of occupation, considering the Related-Transaction is easy to hide and operable, many controlling shareholders choose to use it. We called the behavior as Related-Transaction Tunneling which is the research focus of this article.In this article, we first analyzed demarcation point of the controlling shareholders’ tunneling behavior. Then we added the property attributes, C/V and the proportion of other large shareholders. Then we used the data from CSMar database to run the regression analysis. The result of the regression showed that when the proportion of controlling shareholders reached about50%, the probability of Tunneling behavior is the largest. Secondly, we found that state-owned controlling shareholders acted more Tunneling behavior than non-state-owned. Thirdly, the result showed that other large shareholders didn’t play the relevant role in the detection and prevention of the controlling shareholder. At last, the paper discussed how to prevent and control the controlling shareholder Tunneling behavior.