Research On Family Business’ Tunneling And Countermeasures After Share Split Reform

Since the Asian financial crisis broke out in the late twentieth century,the conflicts of interest between the ultimate controller and minority shareholders have attracted the attention of scholars.Via pyramid ownership structure,interlocking shareholding,dual holding,preferred voting rights or other ways,the ultimate controller of the enterprise can construct hidden path to excavate recessive resources of listed companies against listed companies and small shareholders.Pyramid equity structure is the main equity structure in China’s family businesses.During the family businesses’ governance,ultimate controller has greater ownership with the pyramid holding,and makes key influence to management by stretching family network.Ultimate controller has the ability to occupy resources of listed companies and seeks control benefits.Nowadays,conflicts of interests between the ultimate controller and minority shareholders occur usually under the background of imperfect legal system.Although three years of reform of non-tradable shares solves the circulation problem of shares,it is failed to inhibit the controlling shareholders’ expropriation motivation.In the condition of full circulation,the ultimate controller of listed companies is more likely to increase the mining resources and tunnel behavior is more subtle owe to smaller occupation cost.Aimed at family businesses’ tunneling problem of the period of post split share structure,starting from the angle of ultimate control,the paper explores the tunneling behavior of ultimate control based on internal governance and external environment characteristics of family businesses.It promotes internal governance and enterprises value for family business,and meanwhile the healthy development of capital market.Based on the tunneling behavior of ultimate controllers as the core,the paper summarizes domestic and foreign literature research about tunneling behavior,accumulates a systematic understanding of the defects and deficiencies in the current research status.It makes further theoretical analysis according to the factors of internal governance and external environment of family business impact on the tunneling behavior,and constructs fixed effects model empirical research on the basis of analysis theory,and then establishes the regression model to confirm the rationality between tunneling and control from from the perspective of ownership’s double effect.Finally,from the two angles of the inside and outside of the family business,the paper designs the tunnel behavior restriction mechanisms.The main contents and conclusions of this paper are as follows:1.Literature review of tunneling behavior and comparative analysis: based on consulting a lot of domestic and foreign documents,the domestic and foreign literature studies on tunnel behavior summarized into three levels: the tunnel manifestation mode,ownership level,ownership structure and tunneling behavior,legal system environment and tunneling behavior.Through systematic comparative analysis,carry out innovative research after summarizing the deficiencies existing in the research at home and abroad.2.Analysis and identification of factors for tunneling: this paper breaks through the limitation of research focused on the relationship between the level of internal governance factors and tunneling behavior,and makes a comprehensive analysis of factors that may affectgreatly the ultimate control of tunneling behavior in internal governance and the external environment.Identify the pyramid equity structure,equity balance degree,board governance,governance of the board of supervisors,four committee level,intermediary supervision,marketization and the legal system of environmental eight impact factors for further analysis.3.An empirical analysis on the ultimate controller’s tunneling behavior of family businesses: the empirical analysis results based on the environment characteristics inside and outside the enterprise and tunneling show that :(1)there is a non-linear relationship between the control level and the tunneling behavior of ultimate controlling family businesses;(2)separation of two rights shows a negative correlation with the ultimate control’s tunneling but it is not significant;(3)for the equity balance,second to tenth of the shareholding ratio of the largest shareholder and the tunnel behavior is not statistically significant,but the shareholding ratio of institutional investors has a significant negative correlation;(4)for board of directors,the proportion of independent directors is positively correlated with tunneling behavior,but not significant;(5)for the board of supervisors governance,the scale of the board is negatively correlated with the tunneling of the ultimate controller,but not significant;(6)for four committee level,the number of the commission set up and tunneling have positive significant correlation;(7)for external environment factors,the regional market level has a significant negative impact on the tunneling,but intermediary supervision and the legal level are failed to produce the ultimate controller’s tunneling inhibition.4.Countermeasure research on the ultimate controller’s tunneling behavior of family businesses: based on the empirical research results and the theoretical analysises,make restriction mechanism design forward tunneling behavior from several angles of the family business internal and external,in order to promote the internal governance improvement and standardization of family businesses,improve the supervision quality and efficiency of the main market,and enhance benign interaction and development of the capital market.