Research On Motivation And Economic Consequences Of Tunneling Through Related Transactions

According to the information asymmetry theory and the principal-agent theory,large shareholders have information advantages over small shareholders,and there are conflicts of interest between them.When the sum of the benefits of control and cash flow rights that the major shareholders can obtain is greater than their proceeds in excess of control power,the interests of the major shareholders and listed companies are the same,and they will tend to provide support to listed companies through the input of related party transactions.Contrarily,the major shareholders will be more likely to take advantage of listed companies through related party transactions,thus resulting in a deterioration of the operating conditions of listed companies and a detriment to the rightful rights and interests of small and medium-sized investors.In the market,when it comes to the interest transmission of related party transactions,it often refers to the output of interests,and little attention is paid to the input of interests.It brings a negative image to related party transactions and weakens and neglects their positive role.The order and stability of China’s capital market will be detrimentally impacted,thus impeding the high-caliber growth of the country’s economy.After combing the literature,this paper chooses information asymmetry,principalagent and benefits of control theory as the theoretical basis,and uses the concept of proceeds in excess of control power by Liu Shaobo.The mechanism of interest transmission in related party transactions is analyzed from the aspects of motivation and economic consequences.Then it analyzes the current state of related party transactions of listed companies in China from three aspects: related party transactions,ownership structure and interest transmission of related party transactions.On this basis,chooses Supply and Marketing Daji Group Co.,Ltd.(ST Daji)as the research object.At the outset,we present the fundamental circumstances and the interest transmission of related party transactions of the company,then analyze the manner,motivation,and financial repercussions of the interest transmission of related party transactions in various eras.ST Daji is a commodity circulation service enterprise,which was acquired by Haihang Group in 2003.Subsequently,in 2008,Haihang Group transferred its shares to Haihang Commerce through equity capital increase,and began to adopt the threetier structure of "Haihang Group-Haihang Commerce-ST Daji" to control ST Daji.The interest transmission behavior of related party transactions can be roughly divided into three stages:First,from 2008 to 2016,Haihang Business provided ST Daji with the input of related party transaction benefits through asset injection and business cooperation,in order to integrate the internal resources of enterprises and promote the strategic transformation of listed companies.It has realized the rapid increase of the scale of operation and business income of listed companies.Second,from 2017 to 2021,in order to relieve its own business crisis and obtain proceeds in excess of control power,Haihang Group took advantage of the control rights and information advantages of listed companies,occupied ST Daji collections through financial investment and pledge,and controlled ST large collecti ons to carry out illegal guarantees and acquisition of non-performing assets,which led to the deterioration of ST Daji’s operating conditions,the interests of minority shareholders are damaged.Third,from 2021 to 2022,ST Daji found that the company had 20.028 billion yuan of capital occupation and 4.384 billion yuan of illegal guarantees.As a result,the 2020 annual audit report was presented with uncertainty paragraph related to the continuing operation,which could not be expressed.And the company was applied for reorganization by creditors in 2021,facing a delisting crisis.In order to maintain the listing qualification of ST Daji,the major shareholders provide support to the company through the benefit transmission of related party transactions to help ST Daji temporarily relieve the delisting risk.The case analysis of this paper leads to the following conclusions: First,the motivation for related party transactions can cause a divergence in the flow of resources of interest.Second,the lack of independence of listed companies creates conditions for the output of interest in related party transactions.Third,the input and output of interest in related parties transactions will produce different economic consequences.At last,this paper proffers some ideas to promoting the positive effect of related party transactions and restraining the improper transfer of interests: First,companies listed should ensure that internal control is effective while simultaneously preserving the autonomy of enterprise operation and capital management.Second,investors should strengthen their professional knowledge learning and maintain rational investment,which can assist investment decision-making by analyzing the motivation of related party transactions of listed companies.Third,regulators can use big data technology to enhance information disclosure and supervision of related party transactions and increase the cost of violations.The research on the interest transmission of related party transactions in ST Daji in this paper is helpful to enrich the application of relevant theories and new viewpoints in the case,so as to understand the interest transmission of related party transactions more comprehensively.