Related Shareholders And Tunneling Towards The Listed Companies: Research On The Causes,Methods And Consequences

The issue of agency is such a problem that can’t be ignored in enterprises.At present,researchers are not only focusing on controlling shareholders or the largest shareholders,but also paying more attention to small and medium-sized shareholders.In the absence of controlling shareholders,interest groups with the second largest shareholder as the core and his related shareholders as members gradually emerged.They may have common interests in the company due to explicit relationships like property rights and kinship,or implicit relationships such as business cooperation and industry associations.An alliance of interests based on this formed,making the largest shareholder a mere figurehead,then grabbing the interests of the company.This creates an implicit second type of agency problem.This particularly occurs in state-owned enterprises or companies which the largest shareholder is state-owned.The article takes Shanghai Electric Group Co.,Ltd.which subsidiary called Shanghai Electric Communication Technologies Co.,Ltd.made the huge loss as a case.Explore how the related shareholders’ alliance with the second largest shareholder as the core is formed,which methods they will use to encroach on the interests of the listed companies,and what economic consequences will be caused in this instance.By sorting out the whole process of the occurrence of the incident,clarify the relationship between the shareholders of the subsidiary involved.Based on this,firstly,clarify the research direction and research content of the article,analyze the research background,and find the research significance.Secondly,by browsing through the existing research literature at home and abroad,classify their viewpoints according to the three sets of academic terms required in this article,while defining the relevant concepts involved in the article and explaining the relevant theories briefly.Then,returning to the case itself.First introduce the situation and industry of the case company and its subsidiary.Next focus on the interest alliance formed around the actual controller behind the second largest shareholder of the subsidiary.Take the shareholder relationship of the subsidiary as the starting point.Analyze the reasons and process of the formation of the interest alliance,the channels for encroachment on the interests of the listed company as well as the economic consequences caused by the related shareholder’s alliance.Finally,summarize the conclusions and make the targeted suggestions.According to the above research,the article draws the following three conclusions: First,the reason why the related shareholders with the second largest shareholder as the core can form an alliance that harms the interests of the company mainly depends on the smart design.The relative lack of supervision.The acquiescence of the insiders of the parent company because of direct interest collusion or indirect performance temptation.The design of the subsidiary equity structure and director structure.Make the largest shareholder a mere figurehead step by step,and grasp the actual control of the company.Second,the purpose of encroaching the listed company by related shareholders can be achieved through related transaction,factoring financing,and shareholder loans.By controlling the upstream and downstream of the subsidiary’s business,the related shareholders use related transactions to make the capital flow to its designated company,and occupy it through accounts receivable.To fund the gap it formed,use the accounts receivable factoring and ABS financing,as well as the loans of the parent company,which can also be used to respond to unexpected problems.Third,such operation will not only damage the interests of listed company,but also affect enterprises in the entire supply chain.The profitability and operating capacity of listed company will be hit,and its stock price will fall.Meanwhile,if one company in the supply chain is exposed,not only will this company suffer serious losses,but it may also trigger the collapse of the entire supply chain.