Study of Principal Shareholders Embezzlement

The consequences and possible reasons for the embezzlement of principal shareholders were analyzed and existing problems of external governance and internal governance causing embezzlement of principal shareholders were pointed out. The study indicates that corporate governance could help to significantly improve internal and external governance structures and reduce tunneling. It is necessary and urgent to make legislation to prevent the embezzlement of principal shareholders and it is to make clear legal provisions to curb the idea of embezzlement of principal shareholders. Principal shareholders should be committed to promote better development of the companies and improve the competitiveness of the companies to obtain better prospects. Moreover, economic reforms like the attempt to improve corporate governance and to limit the influence of the state in publicly listed companies are recommended and will help to further improve corporate governance principles in future.