Case Study On Tunneling Behavior Of Major Shareholders Of Kangdexin Group

With the rapid development of China's economy in recent years,the capital market is becoming more and more active.The pyramid ownership structure adopted by the listed companies in China makes the second kind of agency problem between the large shareholders and the small shareholders more and more intense.The behavior of large shareholders hollowing out is common.Many scholars have found that,based on the pyramid ownership structure,due to the difference between voting rights and cash flow rights,the majority of shareholders have the opportunity to empty the company's assets.At the same time,the information asymmetry and the lack of regulatory system brought by the imperfect capital market mechanism in China also provide the majority shareholders with the opportunity to empty the company.This article selects Kangdexin Group as a case company to study the hollowing out behavior of the company's major shareholders.Kangdexin Composite Materials Group Co.,Ltd.was listed on the Shenzhen Stock Exchange in July 2010.Its main business scope is the research,development,production and sales of polymer composite membrane materials.In October 2018,Kangdexin 's controlling shareholder and the second largest shareholder were investigated by the Securities Regulatory Commission due to possible suspected disclosure.Kangdexin Group 's main bank account was frozen in January 2019,and other risk warnings were implemented for the company 's stock transactions.The company's stock name changed from "Kang Dexin" to "ST Kang Dexin".Since Ruihua Certified Public Accountants issued an inability to express its opinion on the 2018 financial report of Kangdexin Group,Kangdexin Group was implemented by the Shenzhen Stock Exchange to deal with the "delisting risk".The company changed from "ST Kangdexin" to "* ST Kangde".Zhong Yu,the actual controller of Kangdexin Group,was arrested in December 2019.At present,the company has fraudulent financial reports and faces the risk of delisting.This article uses information such as financial reports of listed companies,board announcements,and CSRC announcements.It uses a combination of literature research and case studies,combined with Kangde's equity governance structure,company operations,and the reasons and means of hollowing out the controlling shareholder.Specific analysis,put forward relevant prevention suggestions and measures.The research in this paper found that the main reason for the actual controller hollowing out of Kangdexin Company is the high degree of separation of cash flow rights and control rights brought by the pyramidal shareholding structure,the pressure caused by the pledge of large shareholders' equity,and the opportunity for low-cost hollowing out companies,Management replacement reduces the effectiveness of internal control,the company's internal control system deficiencies and weak external supervision brings opportunities for controlling shareholders.On this basis,Kangdexin's controlling shareholders mainly transfer the funds of listed companies through connected transactions,external equity investments,large prepayments,equity pledges and large receivables.This behavior not only damages the company's ability to continue to operate,but also damages the interests of small and medium investors,and disrupts the order of healthy development of the capital market.This article starts with the theoretical research and case analysis of hollowing out at home and abroad,and further deepens the relevant theory of hollowing out.Through a case analysis of Kangdexin 's shareholder hollowing out behaviors,it reminds stakeholders to pay attention to risks,and analyzes the reasons,means,and consequences of hollowing out in combination with specific cases,and puts forward suggestions on external supervision to suppress the hollowing out behavior of large shareholders.Protect the interests of small and medium investors and creditors,and maintain the stability of the capital market.