Case Study On Compulsory Delisting Of LETV Group

With the continuous development of China’s capital market,the multi-level capital market system is gradually formed in the continuous exploration and reform.As an important part of the capital market,the complete and efficient function of the securities market has been highly valued by the relevant departments.For a long time,the delisting difficulty of Listed Companies in China has not been fundamentally solved.Problem companies often evade the supervision of regulatory authorities through improper means such as backdoor restructuring and profit manipulation in order to retain their listing qualification.Based on this background,around the new round of delisting system reform,Shanghai and Shenzhen Stock Exchange officially issued a number of supporting systems such as the stock listing rules.The new delisting rules seize the key links of China’s delisting system and are intended to highlight the function of the survival of the fittest in the capital market.The financial fraud behind LETV group’s delisting,a large number of equity pledge of controlling shareholders,"high transfer" and other unconventional business methods can provide valuable experience for the optimization of listed companies’ future business development strategy and the protection of the rights and interests of small and medium-sized investors.In this context,the research on LETV group’s delisting process is of great significance for the long-term development of the capital market.Based on the above research background,this paper divides LETV’s development process into three stages,combs the development methods and difficulties of different stages and the final delisting process,and analyzes LETV’s business management and delisting reasons by using the methods of fundamental analysis,Z-score Model,principal component analysis and event research method.The conclusions are as follows:(1)LETV’s development strategy decision-making mistakes.The ecological strategy of blindly expanding and seizing the market first led to the company’s failure to seek the development of its main business,the lack of core competitiveness of its products,and brought huge capital chain pressure to the company.(2)Excessive dependence on external financing and excessive debt repayment pressure.LETV relies too much on equity pledge financing and lacks internal continuous hematopoietic capacity.(3)The company lacks a perfect internal control system.The large reduction of controlling shareholders,financial fraud,high transfer and other phenomena show that the company’s risk management system and internal control mechanism need to be improved.According to the research results of this paper,starting from the impact of LETV delisting on small and medium-sized investors,listed companies and the supervision system of listed companies,put forward reasonable suggestions.(1)Small and medium-sized investors should establish an investment system,learn relevant financial and legal knowledge,and use their own knowledge to earn benefits and protect their rights.(2)Listed companies should rationally establish development strategies,cultivate their core competitiveness,adhere to the financing mode of combining internal financing with external financing,and improve the internal control mechanism.(3)The regulatory authorities should improve the regulatory system of listed companies,strictly control the financial indicators,increase the punishment,and jointly maintain the healthy and orderly development of China’s capital market.