A Discussion On Tunneling By Large Shareholders Of Family Companies

Research focus on the agency issues between owners and managers which under principal-agent relationship since the corporate governance theory be pointed out.However,the benefit conflict between major shareholders and small investors is becoming the core concern instead of that between owners and managers.Major shareholders who can influence the daily operation get benefit by use the way of “Tunneling” the company,and the small investors benefit become less and less.Finally,the conflict between major shareholder and small investors become sharper and sharper.Now theory group and reality group are paying more and more attention on it.On the background that family company plays a very important role this problem becoming special and important.Here we do the “Tunneling” research based on the specificity of family enterprises.But with the weakness on our shot time research about the state share sales reform we have less data and the evidence is not adequate about the data analysis.Based on the example which “Hong sheng” be tunneling we analyze the methods and ways how major shareholders tunnel and what cause the tunnel happened.In this way,we can guild family enterprises to avoid tunneling phenomenon.Here we do the tunneling research by the way that standard procedure combine examples.In standard procedure research side we review research from other people.Based on the family enterprises theory,family management code and major shareholders tunneling behavior in and out our country,together with the tincture of family enterprises management theory,agency by agreement theory and corporate control theory,we do the major shareholder tunneling assessment.In example analyze side,we choose the family Long do check the ways how major enterprise tunneling,what kind of risk the market will suffer.Meanwhile with experience from other assessments mu study will show the measures and suggestions to guild to prevent the tunneling in family enterprise.My study has five chapters totally.The first one is introduction.Introduce the background,the reasons,methods,experiences from other research.The experience from other research contained theory and realities in four ways: they are definition of family enterprises,mode of family enterprise management,major shareholder and tunneling theory.The topic of chapter two is theory of the tunneling.Include definition of family enterprise,major shareholders and tunneling.Do analyses about ways how tunneling happened,finally describe the related three theories of tunneling.Chapter three is the example of Hong sheng tunneling.The first step is to show the background of Hong sheng,second step is the comparison about structure from Hong sheng and other non-family enterprise.The last step is about the method how tunneling.Chapter four is about the analysis of tunneling reasons and consequence.With the research on self-benefit,unbalance of inner management,lack of out supervisor and legal risks to find the tunneling motivation,meanwhile we do the consequence assessment from company value,third financial party and market.The last chapter is ways or suggestions to avoid tunneling.According to the research and analysis of tunneling about Hong sheng,my study will show suggestions and measures to reduce major enterprise tunneling behavior.