The Problem Of Tunneling In The Process Of Private Placement Of The Listed Companies In China

On May 8,2006,private placement is officially listed as an available method of equity refinancing to listed companies,compared with the other method of equity refinancing,such as public issuance,allotment,equity refinancing has unique advantages on the low threshold,the low cost,and audit procedure is simple,it can bring in strategic investors,thereby improve corporate governance structure,just after a few years of development,in our country it has been the preferred method of equity refinancing to listed company,the overall collected money of private placement market and the amount of listet companies who financing through the private placement are increasing year after year,As of December 31,2016,a total of 794 listed companies have completed a private placement,and raised a total amount of 1 trillion and 800 billion 899 million yuan,there is an increase of 44.46% compared with 1 trillion and 246 billion 612 million yuan in 2015.However,private placement,after all,is a new way of financing,there are many shortcomings: the issue price can be operated and information disclosure is not sufficient and so on,with the special background of our country,the existence of these problems cause the phenomena of tunneling between major shareholders and listed companies.Issuing low-priced stocks,injecting inferior assets,the huge bonuses after the issuance reducing cash are the common methods of tunneling.These behaviors have not only bad influence,but also damage the interests of minority shareholders,they are also not good for the smooth operation of the securities market.Therefore,it is very necessary to do research on the problem of tunneling through private placement of the listed companies.At first,this paper analyzes the market status of private placement in China based on the review of related literature and theoretical foundation,and then in-depth analysis the problem of tunneling between the Tongde chemical industry and its new directors with the case of private placement of Tongde chemical industry in 2013,the paper mainly analyzes the problem of overestimated value of the purchased asset,the problem of the low issued price,the issued object and the reduction behavior of executives,at the same time,the paper briefly analyzed the business chain between Tongde chemical industry,Tongli explosion and Tongde explosion and the incidence relation between them,the conclusions of the study are as follows: Tongde chemical industry delivered huge profits to its new director through private placement,this private placement diluted the shares of theminority shareholders and small shareholders,Tongde chemical industry paid huge cost to acquisite the asset,which reduced the equity value of minority shareholders and small shareholders.After a comprehensive analysis of this case,this paper proposes some recommendations to solve the problem of tunneling in the private placement: raise the threshold of private placement,strengthen the management of the assessment of assets,limit the number of reductions,make the accountability mechanisms clear.