Purpose: This paper explores the behavior choice of large shareholders in the related party transactions which occur between the large shareholders and listed companies by using the data of shares from 2007 to 2010. Design/methodology/appraoch: Based on the classical research paradigm (that is, LLSV), we analysis controlling shareholders’ propping and tunneling behaviors aiming to make sure their impacts to the medium and small shareholders in theory. Findings: We get the following findings: After our capital market entering the era of full circulation, we find that the relationship between the ratio of controlling shareholders and the related party transactions present (RPTs) an inverted “U” shape curve, which means that it exits a typical “Grab-synergy” effect. we should take different measures to the transactions occurred between the large shareholders and listed companies according to the property nature of the large shareholders. State-owned shareholders choose to realize their private benefits by means of RPTs, while the non state-owned shareholders conduct RPTs with an expectation of reducing costs.Practical implications: Since Guo Shuqing, the Chairman of China Securities Regulatory Commission, took office, he has taken a lot measures to curb the related party transactions harshly. Under this circumstance, it is just the right time to have a research on large shareholders’ behavior. It has important significance both in theory and practice. Originality/value: Considering the Chinese special national conditions, this paper added lots of comprehensive facts to study large shareholders’ behavior including the rate of the share held by indirect controller, the probability of thievish behaviors have been discovered, and the strict punishment regulations. The discussions in this paper help to bring into focus a highly topical issue within the context of the large shareholders’ behavior after Non-tradable Shares Reform.
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