On The Prevention Of Tunneling Behavior Of Listed Companies' Major Shareholders

With the development of economy,Matthew effect has been highlighted,and the equity of listed companies has become increasingly concentrated.There are large shareholders in listed companies that can influence management and decision-making of enterprises.Large shareholders,by virtue of their own control advantages,tunneling listed companies through various concealed ways to convey their own interests,infringe on the interests of minority investors,the agency problem between major and minority shareholder is becoming increasingly fierce.So,there is theoretical and practical significance on how to prevent tunneling,protect the interests of minority investors and maintain the steady operation of capital market.Therefore,this article based on case of BOCO Group' tunneling behavior,studied how to prevent the tunneling behavior of major shareholders.This article adopts case study method,analyses the preconditions,direct motivation,methods and serious consequences of tunneling behavior.Five measures are put forward to prevent the tunneling behavior of major shareholders.The first part introduces the background and significance of the topic,reviews the relevant literature on tunneling domestic and abroad,including the factors of tunneling behavior,tunneling methods,consequences,and measures to prevent tunneling behavior.The second part elaborates the relevant theories used in this paper,including principal-agent theory,pecking order financing theory and transaction cost theory.The third part introduces the case company in detail,then reviews the whole process of the exposure of tunneling behavior and analyses the preconditions and direct motivation of BOCO Group.In the fourth part,through sorting information,we restored the way of tunneling by the major shareholders,and pointed out the serious consequences of tunneling on listed companies and minority investor.The fifth part,based on the relevant theories and combined with the case,puts forward five countermeasures to prevent tunneling: improving the information disclosure system of listed companies;optimizing the ownership structure of listed companies;improving the effectiveness of internal control;improving the independence of independent directors;and improving the protection mechanism of minority shareholders.Through the case study of tunneling,we find out the major defects in the internal governance structure of BOCO Inter-Telecom,which provides convenience for the occurrence of tunneling behavior,and puts forward relevant preventive measures.Hope to provide some reference for enterprises and regulatory agencies to prevent large shareholders from tunneling.