Study On Private Entrepreneurs’ Immigration And Tunneling

The problem of majority shareholder’s tunneling is one of the biggest problems in China’s capital market.It will not only seriously infringe the interests of minority shareholders and listed companies,but also hinder the orderly and healthy development of the stock market.In recent years,with the rapid development of economy,China is undergoing a third wave of immigration,private entrepreneurs account for a large proportion in this wave of immigrants.In China,most private entrepreneurs are in possession of more shares in the company and control of the company,after immigration,with the aid of this umbrella,this private entrepreneurs will be bolder in transferring assets、accounting fraud、tax avoidance、occupying capital of the listed company and other acts.While when the business is deteriorating,they will take the opportunity to flee to those countries to avoid legal sanctions against C hina finally.As what can be seen,the potential impacts should be given sufficient attention.As a typical problem of corporate governance,it’s valuable to discuss the impact of the immigration of private entrepreneurs to tunneling.Based on the principal-agent theory and private benefits of control theory,this paper select private entrepreneurs of immigrants as main factor,listed companies in Chinese A-share stock market from 2007-2012 as samples,and then empirically examines the relationship between the immigration of private entrepreneurs and tunneling.The results show that the immigration of private entrepreneurs have a significantly positive influence on tunneling.The actual controller of private listed companies who had immigrated to other countries are indeed benefit encroachment.Further,when the actual controller of the enterprise immigrates,and preferably when the business area’s business environment is good,the business environment can weaken the positive impact.This results also gave us some inspirations.This paper not only expanded public scholars’ research of the economic consequences about China’s immigration of private entrepreneurs,but also enriched the literature about factors of tunneling.This paper can not only provide empirical evidence for this hot issues of the actual controller’s immigration of the private listed companies,but can also provide further guidance for our government regulation.