Research On The Means And Economic Consequences Of Transferring Major Shareholders’ Interests Under Related Party Mergers And Acquisitions

Mergers and acquisitions,as an important tool for industrial upgrading and resource allocation optimization of listed companies,are becoming increasingly popular in the capital market.And a considerable portion of these mergers and acquisitions occur between listed companies and their affiliated companies,and this specific type of merger often has a strong motivation to hollow out or support.In China,the widespread existence of related party mergers and acquisitions has its unique institutional background.Under the influence of the split share structure,most listed companies in China have a centralized equity structure,which gives major shareholders the motivation and ability to use control rights for profit transmission.At the same time,the internal governance mechanisms and external governance environment of companies that should have restricted the transmission of benefits to major shareholders often fail to effectively exert a restraining effect.Based on the above situation,this article takes the related party merger and acquisition of the A-share listed company Guanfu Co.,Ltd.against the target asset Shanghai Shumi as an example.In 2017,Guanfu Co.,Ltd.acquired a related enterprise Shanghai Shumi that was completely different from its main business.This incident has attracted social attention,and the China Securities Regulatory Commission has issued an inquiry letter.This article uses literature research and case study methods to study the behavior of major shareholder interest transmission in this event.On the basis of analyzing the relevant theories,background,and current situation of related party mergers and acquisitions and the transmission of major shareholder interests,this article conducts a study on the case of Guanfu Co.,Ltd.based on the ideas of motivation,behavior,impact,and constraints.This paper analyzes the acquisition of affiliated companies of Guanfu Company and its follow-up behavior,it is clear that the major shareholder’s related party merger and acquisition has the nature of profit transmission.In the analysis of the means of interest transmission,it is clarified that the major shareholders adopt the means of interest transmission,namely(1)Strive to increase capital before mergers and acquisitions to achieve shareholderasset securitization;(2)Frequent equity changes raise the price of underlying assets;(3)False increase in asset valuation value;(4)Low IPO pricing to achieve high equity;(5)Distribute cash dividends;(6)Select opportunities to reduce holdings.At the same time,research has found that the transfer of benefits through related party mergers and acquisitions can result in more concentrated equity,collaborative integration risks,and reduced company value and other economic consequences.Meanwhile,after investigation and analysis,the article holds that,compared with other commonly used ways of income transmission,related party mergers and acquisitions involve more covert and diverse means of interest transmission.Therefore,in practice,related party acquisitions by major shareholders are often their first choice.In addition to the lack of effective system and legal environment and other external environmental constraints,there are many internal defects in the corporate governance of Guanfu Group.such as excessive power of major shareholders,lack of internal mechanisms to restrict them,and non-existent directors.These are also important reasons that encourage major shareholders to engage in mergers and acquisitions with related parties on the grounds of listed companies,in order to seek self profit profits.At the end of this article,corresponding policy suggestions were proposed from the perspectives of internal governance and external supervision,and the entire article was summarized.