Financial Distress Of The Largest Shareholder?Market Value Management And Tunneling

The start of the domestic share reform made the capital market began to enter the circulation time.May 8,2014,the State Council issued "Opinions on Further Promoting the Development of Capital Market",explicitly encourage listed companies to establish the market value management system.So institutions and listed companies both have to pay attention to the market value management.In China,the central enterprises,which are the leading force in the national economy,mainly distribute in the key area such as national security and economic lifelines of the important industries,shouldering the important mission in promoting the transformation of economic development and economic restructuring.The concept that market value need to be managed should gain understanding and recognition of the management,prompting them make it into action.In other words,since the concepts and theories of "tunneling " have been mentioned,the largest shareholder and its aftermath has been hollowed out as a hot topic in the area ofcorporate g emerged a large number of research results.There are many ways for the largest shareholders to do "tunneling",such as embezzle the company's development opportunities,transfer pricing in favor of one's own interest,use the assets of the company to provide security for themselves,dilute stock right of minority shareholders.Currently,few specialized academic study has focused on its effect on tunneling from the perspective of the financial distress of the largest shareholders,and most of research inferred the motivations of the party of tunneling based on the perspective of the party which had been tunneled(listed company).Actually,which truly reflects the motivations of the party of tunneling is its own financial and operating conditions,which is difficult to be put into research because of its missing data.Lack of attention on the party of tunneling had greatly limits the explanatory power of the literature of the largest shareholders.Existing literature shows that academic studies in order to protect the interests of small shareholders which under the perspective of the tunneling of the largest shareholders mostly concentrated on the perspective of legal and corporate governance,there is few paper which do the research from the unique perspective of the market value management,related literatures are lacking.Based on the above background,this paper firstly makes a preliminary theoretical analysis and judgment on the relationship among the financial distress of largest shareholder?market value management and tunneling.Through empirical research,this paper selects the listed companies controlled by central enterprises as samples,firstly confirms that there is a positive correlation between financial distress and the tunneling of the largest shareholder;Secondly,we refer the performance of listed companies made by the Management Research Center,using the score of to measure the effect of market value management,putting it into the empirical model as a moderator,and finally come to conclusion: the market value management helps to weaken the behavior of tunneling of the largest shareholder,playing a governance role in some way.This paper depicts the motivation of the tunneling of the largest shareholder based on the financial situation which is a quite unique perspective,enriching the relevant research literature,and providing direct evidence of the impact on the vital interests of the largest shareholders of listed companies.And it has proved that in the face of financial difficulties this abnormal situation,the market value management has governance effect to the tunneling,providing direct empirical evidence to reduce capital occupied by the largest shareholder,protect the interests of minority shareholders.