The Research On The Tunneling Behavior And Its Impact Of Large Shareholders Under Family Control

With the development of the capital market,the governance structure of the company has become more complex and diversified,and the family control business has also become a more common form.Family members usually have the advantages in the number of the shareholders,the board of directors or the managers,or they can form the actual control advantage through the ownership concentration,so as to achieve the purpose of the unpractical separation of ownership and management,and become a so-called "family control" company.Because family-owned companies have more involvement in corporate ownership,governance and management,which creates favorable conditions for the tunneling behavior and aggravate the second principal-agency problem.In recent years,it is not uncommon for family large shareholders to tunnel listed companies and infringe the interests of small and medium shareholders through various methods.That kind of behavior have a terrible effect on the development of the capital market.Therefore,how to curb the tunneling behavior of the major shareholders of family under the background of a market economy with Chinese characteristics has become an urgent problem to be solved.This paper focuses on the tunneling behavior of the family large shareholders of ~*ST Chengdu Huaze Cobalt&nickel Material Co.,Ltd,mainly adopts the method of combining normative research with case studies.In the theoretical introduction,the literature research method and deductive induction method are adopted.After reading a large number of relevant academic documents from domestic and abroad,the existing research views are summarized.The principal-agent theory,control income theory and information asymmetry theory is used as cornerstone to analyze the case.In this case study,the paper starts from the perspective of family control,then takes the second principal-agency problems as a breakthrough point to analyze the ~*ST Chengdu Huaze Cobalt&nickel Material Co.,Ltd family shareholder's tunneling behavior,its causes and its impacts.After considering all of above,the relevant conclusions are drawn and the countermeasures and suggestions are put forward accordingly.In the core analysis part of this article,the writer specifically analyzes the tunneling ways of the large shareholders,which includes occupying non-operating funds,using related transaction to transfer funds,illegal guarantee,debt transfer,and maliciously stock pledge without paying back.On the basis,the paper propose that high ownership concentration of large family shareholders,useless internal control,the mutual protection of the executives,the poor supervision of the supervision department,the low cost of the law,the opaque information disclosure and the failure of the external audit provides convenience to family large shareholders tunneling.Based on the above tunneling behavior of family large shareholders,this paper analyzes the consequences of it from three aspects: company,market and shareholders.The paper holds the view that the reduction of cash flow caused by tunneling will affect the company's operating funds and reduce the company's operational and financial capability,and as a result,reduce the value of the company.The tunneling behavior of the family large shareholders will damage the company's image,affect the market order,the efficiency of the resources allocation,and damage the investor's confidence and the interests of the small and medium shareholders.In extreme cases,the control of the family large shareholders will be transferred.Based on the above analysis,this paper draws a conclusion from three aspects: the conditions of tunneling,the general characteristics of tunneling behavior and the influence of tunneling.The high concentration of ownership and the failure of internal and external supervision create opportunity for the tunneling of the family large shareholders,and the tunneling behavior of the family large shareholders is diverse and concealed,the influence usually extensive and lagging.Considering the tunneling behavior of family large shareholders,the writer think it can be effectively reduced through the balance of equity,the introduction of the independent director association system and the two-way selection mechanism.Improve cost of violation and the transparency of information can also take effect.The external supervision and audit quality should also be enhanced.The study of family control in the early academic circles focused on the value of the enterprise,the performance of the company,the mode of governance and so on.In recent years,the principal-agency problem brought by family control has aroused extensive discussion in the academic circle,but on the whole,only few papers study the tunneling behavior and its impact of the large shareholders under the control of the family.Compared with foreign countries,domestic research on tunneling under family control is lagging behind,and the research mainly focus on the level of company's value,performance and earnings management,and most of the studies have been biased towards empirical research.Therefore,the previous studies on tunneling under family control are mostly in the theoretical analysis or lack of feasibility,and there are few pertinent conclusions and suggestions combined with the actual market.Based on the actual situation of the listed companies,this paper provides a pertinent and practical theoretical support for improving the market regulation and corporate governance of the family controlled enterprises,enriches the theoretical study of the tunneling behavior under the control of the family.The paper has a certain practical significance for restraining the tunneling behavior of family large shareholders and improving the supervision of the relevant departments.