Research On Tunneling In The Process Of Private Placement-Based On The Case Analysis Of Hubei Aviation Precision Machinery Technology Co.,Ltd.

With the development of financing diversification, especially after the split share structure reform in 2006, capital market set off a wave of private placement craze. There are unique advantages behind the craze such as the striking major shareholders’ inject quality assets and the introduction of strategic investors. However, there are also hidden problems that shareholders who have control rights are likely to harm the interests of minority shareholders by tunneling. Because of our rules and regulations related to the private placement is not perfect, the transfer of benefits lead to the decline in performance of the company directly, increase the company’s stock price volatility and further harm the interests of minority shareholders and stock investors, thereby disrupt the entire capital market. The number of study on the transfer of benefits problems in the private placement is a lot, most of which is concentrated in the empirical research on the private placement discount announcement effect and some other phenomena. Placement in Chinese capital market is popular, which makes the tunneling more and more rampant, with certain major shareholders’ hidden manipulation, making the authorities more difficult to implement effective regulation of this behavior. Therefore, the study of the tunneling in the process of private placement is particularly important and it’s valuable to explore the process of tunneling.This paper selects Hubei Aviation Precision Machinery Technology Co.,Ltd. as the case to analyze the possible existing of tunneling problems in its private placement and assets injection in 2012.The author reviews the private placement motivation, causes and way of private placement in the transfer of benefits and so on by reading a lot of paper researching placement mode and the announcement effect. Then the paper analyzes internal and external motivation as well as achieve path in the mechanism part of tunneling in private placement through combining related theory. By collecting a lot of data before and after the issue occurred, this paper further judges the existing of tunneling in Aviation Precision Machinery’s private placement and assets injection in 2012.Then this paper discusses the methods, means and the economic consequences of tunneling in Aviation Precision Machinery’s private placement in 2012 to provide some references and suggestions for small investors and regulatory authorities.