Research On Tunneling Behavior Of Major Shareholders Under Equity Pledge ——Case Study Based On Kangdexin

As a financing method preferred by major shareholders,equity pledge has the superiority of low cost and simple financing.More importantly,after this business,the control of shareholders will not be shaken,but it can effectively perform Transfer part of the risk yourself.Therefore,the domestic equity pledge market has been in a very active state.However,the problems caused by equity pledges should not be underestimated.If the company is in poor condition and the stocks fall,it is easy to cause forced liquidation.In addition,equity pledges will also induce major shareholders to tunnel out the enterprise.In recent years,there have been incidents in which large shareholders of companies with a high proportion of equity pledges have hollowed out,causing irreparable losses to enterprises,small and medium shareholders,and the entire economic market.The state also introduced the so-called strictest equity pledge policy in 2018,and the domestic equity pledge market has only converged,but there are still many problems in the market.As a company that has become extremely popular in recent years,Kangdexin’s major shareholder hollowing out caused by equity pledges is an important reason for its decline from glory.Taking Kangdexin Enterprise as an example,this article first describes in detail the status quo of equity pledge and hollowing out in the domestic market.Then,starting with Kangdexin’s tunneling behavior of major shareholders,it analyzed the methods of tunneling,the reasons for its implementation,and the destination of the tunneled funds,and then analyzed the motives of equity pledges and the mechanism of influence of equity pledges on the tunneling of major shareholders.Finally,The economic impact caused by it is analyzed.In the analysis of this article,it is found that Kangdexin has a greater demand for funds due to business expansion,coupled with the advantages of equity pledge financing,at the beginning of the listing,Kangde Group began to pledge a big scale of equity which deepens cash flow rights and the separation of control rights,and will also reduce the cost of hollowing out by major shareholders,transfer part of the risk to major shareholders,and finally cause excessive investment in the company,resulting in low operating efficiency and capital turnover.Difficulties have strengthened the motivation of major shareholders to hollow out.Since then,Kangdexin’s major shareholders have facilitated the use of related transactions,capital occupation,illegal guarantees,and replacement of senior directors to conduct hollowing activities.The successful implementation of the hollowing-out by the major shareholder has a lot to do with its shareholding structure,the collusion of the two shareholders,the imperfect information disclosure,and the lack of supervision.The analysis found that Kangde Group used the hollowed-out funds for business expansion and the supplement of equity pledge funds.It can be said that the equity pledge and the hollowing-out behavior are closely related.In terms of economic impact,this article analyzes based on the affected subjects.First,through various economic indicators,EVA calculations and Tobin’s Q value calculations,it is found that Kangdexin’s indicators in the early stage of equity pledge are actually on the rise,indicating that equity pledge has played a positive role in Kangdexin,but in the later period,due to The degree of hollowing out of major shareholders has deepened,and Kangdexin’s various indicators are severely declining.The equity pledge has brought negative effects to Kangdexin and has seriously damaged the value of the company.Secondly,it is also found that the pledge of equity will cause the stock price to fall,and ultimately bring certain damage to the small and medium shareholders.Furthermore,the liquidation of the pledge will make it difficult for the pledgee to recover funds,and may be forcibly transferred to shareholders,and ultimately suffer huge losses.lt can be seen that once the equity pledge has a negative impact on the company,all stakeholders will be severely damaged.Through the analysis of Kangdexin’s case,this paper studies in detail the tunneling behavior of major shareholders under equity pledge and the economic impact caused by it.The Kangdexin incident has a huge impact,but it is by no means an exception.Although the state has been introducing policies to manage equity pledges,there are still many potential "Kangdexin" in the market.It is hoped that enterprises can discover the potential risks of equity pledge in a timely manner,and correctly treat the impact of equity pledge as a financing method.