Research On Tunneling Behavior Of Controlling Shareholders In M&A Activities

With the development of macro-market economic environment is becoming more and more mature,the competition in China’s capital market is becoming more and more fierce.Only by developing and growing can the company in the development torrent not be washed away in the ebb tide,and achieve survival.Mergers and acquisitions,as an important way to achieve unconventional development and capital concentration,are more and more widely used.Since 2014,stimulated by the relevant policies of major asset restructuring and the current situation of IPO barrier lakes,M&A activities in the capital market have become unprecedented popular,and even formed a blind trend of M&A expansion in a short period of time regardless of whether it is necessary,appropriate or sustainable.During this period,the Internet mobile game industry,backed by the "13th Five-Year Plan," has become a wave of mergers and acquisitions,attracting cross-border capital competition by virtue of its strong ability to attract gold and active cash flow.Become the choice of mergers and acquisitions of many listed companies in transition to survive,and industrial companies with strong capital are involved in gold,therefore,mergers and acquisitions in recent years is the traditional industrial companies and Internet game companies strategic development of the norm.But such a combination of the two industries is often easier to form a conceptual high-premium merger,That is,a form of cross-border M&A with higher probability of premium and higher uncertainty of the company’s operation after M&A.This form is more likely to cause hidden dangers to the company’s future development: goodwill bubble accumulation,high performance commitment and hidden business risks.Due to the existence of asymmetric information,capital markets often fail to detect risks in time,and when these hidden dangers begin to emerge,The controlling shareholder,which should be affected most seriously,has already obtained a lot of income by tunneling listed companies,leaving only investors and small and medium-sized shareholders to share and bear the losses,and eventually even cause financial market risk.Based on the above situation,this paper studies the relevant theories of M&A tunneling.On the basis of combing the relevant concepts and research results,firstly,it makes a certain analysis of the correlation between M&A activities and the tunneling behavior of controlling shareholders in theoretical research.Then taking*ST Eiger as a specific research object,this paper analyzes the relationship between M&A activities of listed companies and tunneling behavior of controlling shareholders,combs the motivation and conditions of tunneling behavior of controlling shareholders in M&A activities,analyzes the realization path and influence transmission of tunneling behavior,and puts forward feasible suggestions accordingly.First of all,after reviewing the related literature,defining the main concepts and expounding the relevant theories,this paper introduces the institutional background of market M&A and the present situation of controlling shareholder tunneling in M&A activities in China,which paves the way for the following research.Secondly,this paper focuses on the case of *ST Eiger,taking 2015 as a starting point,sorting out the situation of several M&A activities in 2015-2018.On this basis,according to the logic of "can-why can-how can" to study and analyze the motivation conditions and path means of controlling shareholders’ tunneling,and excavate the essence of interest transportation behind their behavior.Then,this paper uses financial index analysis and EVA valuation method to analyze and evaluate the economic situation of listed companies after being hollowed out.At the same time,it also analyzes the adverse impact on the rights and interests of minority shareholders.Finally,on the basis of the above analysis,the conclusions of this paper are drawn,further support the necessity of research,and put forward relevant suggestions.Through the research and analysis,this paper draws the following conclusions:First,there will be a closed-loop structure between M&A activities and the tunneling motivation of controlling shareholders,that is,the mechanism of "M&A-alienation motivation-(strengthening)tunneling intention-M&A." Second,the huge amount of equity pledge,the time difference of information transmission,the information difference between inside and outside the company,the ratio of punishment to income and the current follow-up measurement method of goodwill are the reasons for the controlling shareholder’s tunneling behavior.Third,*ST Eiger’s controlling shareholders carry out conceptual high-premium mergers and acquisitions,while illegally occupying funds through related party transactions for a long time,and transferring funds by means of selective reduction,in order to hollow out listed companies.Fourth,the tunneling behavior causes the listed company’s financial performance and the company value to be seriously damaged and finally delisted,also causes the minority shareholders’ rights and interests to suffer the huge loss.Based on the above conclusions,this paper gives suggestions on how to prevent controlling shareholders from tunneling from the aspects of internal governance,external supervision and objective policy constraints.The contribution of this paper is to make a useful supplement for the development of M & A arbitrage concept,and provide reference experience for listed companies to identify and prevent controlling shareholders from tunneling through M & A.