A Case Study On The Tunneling In Private Placement And High Ratio Stock Dividends Of Chinese Listed Companies

As the main way of equity financing in Chinese stock market,private placement has the advantages of flexible issuance,low issuing cost,and can meet the strategic development needs of listed companies.In 2016,796 listed companies in Chinese stock market completed private placements,and actually raised 1,295.46 billion yuan.Faced with the vigorous development of private placement,how to identify the tunneling problem has been highly concerned by academia.In the past,common methods of tunneling included low price increase,connected transactions,poor asset injection,and high dividends.Since 2015,some listed companies in China have been tunneling through cooperation between private placement and high ratio stock dividends.It is of practical significance to study this kind of tunneling.The case study method is used in this paper to analyze the problem of tunneling in VRV.The second type of agency theory,"tunneling" theory,catering theory and supervisory effect theory are used as the theoretical support.Firstly,this paper briefly introduces the plans of private placement and high ratio stock dividends of VRV in 2016.Secondly,this paper analyzes the motivation of private placement and high ratio stock dividends of VRV,the approach of tunneling and the operating performance.The study found that VRV prepared for high ratio stock dividends by accurately supplementing the capital accumulation fund through private placement.VRV stabilized share price through the suspension before private placement,and chose premium issuance without lock-up period.After the issuance,the high ratio stock dividends plan was promptly launched to stimulate the stock price increase,which helped institutional investors to reduce their holdings in order to achieve the purpose of collusion between large shareholders and external investors for tunneling.VRV's overall operating conditions deteriorated and the interests of company were damaged.Lastly,this paper draws inspiration such as modifying the lock-up period for private placement of GEM,increasing the restriction of high ratio stock dividends,improving the screening ability of the regulatory agency for tunneling,and paying more attention to investors education.