Study On Tunneling Behavior Of Major Shareholders Under Equity Pledge

Since the 21 st century,with the rapid development of Chinese economy,the scale of the capital market has gradually expanded.In particular,the securities market has grown by a factor of 12 in the past 20 years.The increase of listed companies has played an important role in China's economic construction.On the other hand,the controlling shareholders' interest in the minority shareholders has also gradually increased.In fact,since the beginning of the capital market,the protection of minority shareholders' rights and interests has been the focus of many scholars.How to restrain the large shareholders from short selling,how to protect small and medium investors is also the most difficult problem facing the regulatory authorities of various countries.In recent years,due to the continuous advancement of financial deepening,more and more major shareholders have turned their attention to new financial instruments such as equity pledge in order to evade supervision.Different from traditional financing channels,the biggest advantage of equity pledge is that there is no transfer of control rights while pledges to obtain funds.This low-cost,convenient financing method has been favored by major shareholders since its launch.Equity pledge will not only exacerbate the separation of control rights and cash flow rights,but also reduce the short-selling costs of controlling shareholders,making the motives of large shareholders short-selling,and to a certain extent,equity pledge is equivalent to disguised cash This will also make the link between equity pledge and major shareholder short-selling closer.This article selects the case of Protruly tunneling,which has a huge impact on the capital market in recent years.Zhuang Min,the largest shareholder of Protruly,used a variety of refinancing methods based on equity pledge to raise a large amount of funds after listing,and then through Large-scale foreign investment,large prepayments transactions,and borrowing asset restructuring to speculate in stock prices have caused a large amount of net cash flow out of the company.In the end,Zhuang Min left after the stocks he held were not released,causing the stock price to plummet and the small and medium investors to suffer heavy losses.Among them,the equity pledge plays an important role like the "engine".Through a detailed analysis of the case of Protruly tunneling,this article finds out the different short-selling methods and the impact of equity pledge on the short-selling motives and finds out the defects of China's capital market development:many companies internally Governance is chaotic,the board of directors is ineffective;government supervision is seriously lagging behind,and punishment is insufficient;China's securities market lacks value discovery and speculation is prevalent.Finally,this paper proposes specific policy recommendations from both internal and external aspects.The main recommendations for internal corporate governance are:strengthening internal control of the company,increasing the participation of small and medium shareholders,and improving the independent director system;The main recommendations for external supervision are: strengthening the government's supervision function,increasing the intensity of illegal punishment and opening up other external supervision channels such as media supervision.