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Large Shareholders’ Behavior of Assets Injection Under the Postperiod of Split Share Structure Reform
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TANG Zongming1，PAN Chenxiang1，LIU Hailong1，JIANG Keping2
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(1. Antai College of Economics & Management, Shanghai Jiaotong University, Shanghai 200052, China; 2. Financial Office, Shanghai Jiaotong University, Shanghai 200240, China)
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Abstract This paper uses the economic optimal method and discount cash flow approach to explore the internal incentives of large shareholders’ assets injection. Then, assuming the large shareholders would tunnel the injected company, the paper analyzes the related factors of their net income of tunneling in order to disclose their motivation of assets injection. The modeling analysis shows that ① The profit of assets injection to large shareholders positively relates to the shareholders’ ownership, injection size, and priceearnings ratio of the listed company’s stock. ② The higher the operating efficiency of injected companies and the better synergistic effect of the injected assets, then the stronger incentives to asset injection from large shareholders. ③ Taking into account the market value of the share holdings, the tunneling incentives weaken. ④ Large shareholders’ tunneling proceeds are inversely proportional to injection size. So, the bigger injection size, the less prone to tunneling. Therefore, the assets injection itself induces the change of large shareholders’ behavior from tunneling to propping which will lead to a better firm performance.
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Received: 30 October 2009
Published: 31 December 2010
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