Analysis Of Tunneling Behavior Of Large Shareholders Based On The Perspective Of Internal Control

The pace of global economic development is gradually accelerating.China has gone through many difficulties and hardships to surpass it and become the world’s second largest economy.The huge capital market has made an indelible contribution to this,but "shady transactions" are easy to appear in the "busy market".With all kinds of irregularities occurring one after another,there are also more and more cases of major shareholders hollowing out listed companies.Although the regulatory authorities have introduced a number of measures to try to protect small and medium investors,the interests of small and medium investors have been infringed by large shareholders from time to time.This article selects Chengdu Huazegunie,which was delisted due to the hollowing-out behavior of major shareholders,as the research object.On the basis of combing the relevant literature,learning from the research results of relevant scholars at home and abroad,the case analysis method is adopted.The core concepts are defined and related theoretical foundations are described.Secondly,it analyzes the main methods and economic consequences of the case company’s major shareholders’ hollowing-out behavior.The study found that the case company ’ s major shareholders used various methods of emptiness,such as capital appropriation,illegal guarantees,equity pledges,and the use of insider trading to manipulate stock prices.The economic consequences of a decline in the company’s operating performance,a sharp drop in market value,and severe damage to small and medium shareholders.Then,based on the perspective of internal control,it analyzes the causes of the hollowing-out behavior of major shareholders from the four dimensions of internal environment,control activities,information and communication,and internal monitoring.It is concluded that internal control defects are the internal incentives for the hollowing-out behavior of major shareholders.Based on the conclusions of the research,and based on the internal control perspective,proposed relevant suggestions to improve the corporate governance mechanism,establish an internal related party transaction review mechanism,establish an internal review mechanism for major shareholders’ equity pledges,and optimize information disclosure mechanisms to prevent major shareholders’ tunneling behavior..Finally,the research conclusions are drawn,and the future directions for further research are prospected.It is hoped that it can provide a reference for listed companies to strengthen the construction of internal control systems,improve the quality of internal control,and effectively prevent and control the tunneling behavior of major shareholders.