The Research Of Product-market Competition And Large Shareholders’ Behavior Of "Tunneling" Under The Government Regulation

Although highly centralized equity improved the agency problems betweenshareholders and managers or operators, large shareholders, taking advantage of controlrights, occupy the resources of the listed company by the various ways, and misappropriatethe interests of small shareholders. This behavior is called "tunnel" behavior, also knownas second agency problem in the corporate governance. Large shareholder "t unneling"behaviors have occurred in many countries of the world, attracting the scholars,government.At present, a lot of research has been done on causes, influence factors of largeshareholder "tunneling" behaviors by domestic and foreign scholars.However, whilereviewing literature, we find that scholars prefer to, from the perspective of corporategovernance inner mechanism, study the problem of large shareholders’ occupationof fund,rather than, from the perspective of the enterprise external environment, study the externalfactors effect of the capital market. Natural selection and survival of the fittest ", this isthe law of survival in nature. However, in the economic society, enterprises should alsofollow this law. The environment of enterprises in the economic society is formed by theenvironment of competition and the government intervention or regulation. In this article,on the basis of big shareholder "tunneling" behavior inference, if the degree of competitionin the market is high, and whether the enterprise is very difficult to obtain the excess profit.To avoid the bankruptcy, it is interesting whether large shareholders would reduce thecapital of the enterprise or the interests of the occupation. Then, the first problem is fromperspective of market environment, focuses on whether product market competition canrestrict the big shareholder "tunneling" behavior. The market economy in China istransformed from the planned economy. In capital market, most of the listing Corporationare state-owned or state holding enterprises. According to statistical data of China, in themonopoly industry, state-owned enterprises have a high proportion of non-state ownedenterprises, the ratio is very low, and even some industry does not exist in non-state ownedenterprises. Therefore, to analyze the relationship between product market competition andshareholder "tunneling" behavior, taking the distinguishing characteristics intoconsideration, this paper analyzes whether the relationship between produc t marketcompetition and shareholder "tunneling" behavior is different due to the form ofownership. The market environment of "Survival of the fittest" is ideal study state of economists.In many countries, the governments in order to achieve the goals of national prosperity inthe market environment, take the different levels of regulation. However, when theregulations achieve objectives, at the same time, they also changed the competitiveenvironment of enterprises. For example, entry and exit barriers: special industry is raised,the industry pricing restriction etc.. The change of conditions make the market thephenomenon of administrative monopoly formed as a result of government regulation, thuschanging the market structure and the formation of the reasons for its regulation, inaddition to the external environment changes, it will affect the person’s behavior. So thegovernment regulation is the possible relationship between the changes and the productmarket competition the big shareholder "tunneling" behavior. The second problem in thepaper is the analysis results for the first problem which based on further analysis ingovernment regulation under the background and how inhibit effects between productmarket competition and shareholder "tunneling" behavior change.For the above research questions, this paper collects the2009-2012Shanghai stockexchange and Shenzhen stock exchange A share listing Corporation data, and buildseconometric model to analyze the above issues.Firstly, use the Finn Dahl index to measure the degree of product market competition.Take it as the model variables, the occupation of large shareholders in listing corporationcapital as the dependent variable to study the degree of product market competition andshareholder "tunneling" behavior. From the descriptive statistical analysis of samples ofdata showed that the degree of product market competition is different. There is asignificant difference between the large shareholders "tunneling" behavior. Linearregression analysis found that the higher the degree of product market competition, bigshareholder "tunneling" behavior is not obvious, which indicates that the product marketcompetition have inhibitory effect on the big shareholder "tunneling" behavior.Secondly, this paper draws on the research of the government regulation of ourcountry scholars such as Wang Wenqing. The industry is significantly affected by stronggovernment regulation according to whether the industry is divided into administrativemonopoly and non-monopoly industries. According to this classification method, totalsample can be divided into two sub samples for empirical research. The results show that,under the strong government regulation of administrative monopoly industries, therelationship between product market competition and shareholder "tunneling" behavior is not significant. While in the non-administrative monopoly industries, product marketcompetition and shareholder "tunneling" behavior is negatively correlated significantly.The empirical results fully demonstrated that it is the government’s intervention, the degreeof product market competition on the major shareholders lost inhibition mechanism of"tunneling" behavior.Therefore, this paper believes that, improving our market competition degree caneffectively inhibit the large shareholders "tunneling" behavior. And this paper suggests thatthe regulatory impact on the degree of market competition should be fully considered,relaxing the control on the market, strengthening the construction of market economywhich also includes the construction of the legal system in market economy, playing itsrole in promoting competition, and improving the development of capital markets in orderto protect small investors interests.