Research Under Equity Pledge Situation Which Is About Tunneling Behavior And Economic Consequences Of Kangdexin’s Major Shareholders

With the continuous improvement of Chinese economic situation and the steady development of the capital market,the behavior of equity pledge appears more and more in Chinese listed companies.Coupled with the advantages of easy trial,fast financing and low cost,equity pledge blooms everywhere,and the major shareholders of listed companies favor it so much.However,major shareholders not only use equity pledge to bring the company financing convenience,but also bring business risks.If the economy goes down and the share price falls to the closing line,the shares which are pledged by major shareholders may face the risk of being forcibly sold by the pledgee.Then,the major shareholders will lose grip,the company’s value will suffer a heavy blow as well.In addition,the equity pledge will lead to the split of the cash flow right and control right,which will result in a kind of hollowing out behavior,and strengthen the hollowing out motivation.Therefore,it is necessary to consider the equity pledge behavior of major shareholders.As the once "100 billion white horse shares",Kangdexin has realized the integrated development in optical films,new materials,internet intelligent applications and so on.In order to seek more diversified development,Kangde group,the major shareholder of Kangdexin,has embarked on the road of equity pledge early.Moreover,with the continuous development of Kangdexin,Kangde group ledged more and more shares,and the hollowing out degree of Kangdexin is also deeper and deeper.Based on this,this thesis explores the empty motivation of Kangde group from two aspects.One is the financing demand and the other one is interest occupation,and finds that Kangde Group continued to empty Kangdexin’s assets by signing secret agreements,providing illegal guarantees and violating contract agreements,which eventually led to Kangdexin’s exposure of financial fraud scandal and forced delisting.Based on the case study of Kangdexin,this thesis believes that in order to prevent major shareholders from hollowing out listed companies,we should make great efforts in two ways.In the company,management should perfect the ownership structure,equity structure,the board of directors system and the board of visitors system.Meanwhile,the company must think highly of the internal control system to avoid making it a mere formality;The external of the company should also carry out relevant optimization,improve the laws and regulations related to equity pledge,and increase the illegal cost.Auditors should also improve their professional ethics and maintain their due independence during the audit.Minority shareholders should also improve their professional knowledge and prevention awareness,invest carefully and avoid losses.