What determines the severity of tunneling in China?
HW Hu, P Sun
Asia Pacific Journal of Management | Springer (part of Springer Nature) | Published : 2019
This study contextualizes the agency theory perspective in the Chinese setting to better understand the determinants of tunneling by controlling shareholders, a well-known form of principal-principal (PP) conflicts in corporate governance. Specifically, we examine how owner identity, managerial agency, and subnational institutional environments individually and collectively shape the severity of tunneling in Chinese publicly listed firms from 2005 to 2010. The empirical analysis shows that local governments and private enterprises tunneled more wealth from their respective listed subsidiaries than did central government agencies. Further, the severity of tunneling was greater in companies wi..View full abstract
Awarded by China's National Nature Science Foundation
We are indebted to Daphne Yiu (Senior Editor) and the anonymous reviewers for their insightful and constructive comments. We also acknowledge the audience of our presentation on the Strategic Management Society 32nd Annual International Conference in Prague, Czech, 2012, for their comments on an early version of the paper. Pei Sun acknowledges financial supports from China's National Nature Science Foundation (grant no. 71672040) and the Shanghai Shuguang Scholar Program.