Study On Controlling Shareholders' Tunneling Or Propping In Panda Fireworks Group CO.,LTD

In recent years, the academic research of corporate governance gradually transferred from the first agency problem to the second agency problem between the controlling shareholders and minority shareholders. Among many studies, we found the research mostly focused on the tunneling behavior of controlling shareholders and its impact on company performance or values and so on and rarely involves the content about "propping" behavior of the controlling shareholders and its influence etc. With the deepening of the studies about the behavior of the Controlling Shareholder, many scholars found that the motivation of tunneling and propping is exist at the same time. In this paper, we based on the principal-agent theory, the private benefits of control, the mechanism protection of minority shareholders, and the institutional background of corporate governance modes in China, to analyze the tunneling and propping behavior of the controlling shareholders. We selected Panda Fireworks Company as a case study, to analysis the “tunneling” and “propping”behavior of Panda Fireworks shareholder in the period 2005-2014. When and to what extent controlling shareholders are likely to tunnel or prop, how about its economic consequences,according to some problems in corporate governance of Panda Fireworks, with the conclusions of this paper, we putting forward some suggestions to help minority shareholders to distinguish “tunneling” and “propping” effectively, and improving their self-protection awareness, and suggesting to enhance the level of corporate governance.The main contributions include:(1) Analyzing “tunneling” and “propping” of the controlling shareholders to enrich the existing literature.(2)Help minority shareholders to strengthen their self-protection awareness.(3) Putting forward some suggests improving the corporate governance level of listed companies and the protection of minority shareholders.