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The pervasiveness and severity of tunneling by controlling shareholders in China

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Author Info

  • Li, Guoping

Abstract

This article investigates tunneling by controlling shareholders in China's public companies, and finds that, first, tunneling is pervasive and severe; and, second, private controlling ownership significantly increases the severity of tunneling. This article argues that in China, where there is not sufficient and effective legal protection for investors, controlling shareholders, especially shareholders of privately controlled public companies, are able to conduct tunneling at minimal costs. Further, corporate governance mechanisms alone are not sufficient to protect minority shareholders.

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File URL: http://www.sciencedirect.com/science/article/B6W46-4YFK2T8-1/2/58a69ef5e0b963b13d47700000640fcb
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Bibliographic Info

Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 21 (2010)
Issue (Month): 2 (June)
Pages: 310-323

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Handle: RePEc:eee:chieco:v:21:y:2010:i:2:p:310-323

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Web page: http://www.elsevier.com/locate/chieco

Related research

Keywords: Privatization Tunneling Corporate governance Private controlling ownership State-owned enterprise reform;

References

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  1. Xiaozu Wang & Lixin Colin Xu & Tian Zhu, 2004. "State-owned enterprises going public "The case of China"," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(3), pages 467-487, 09.
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  3. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
  4. Lin, Justin Yifu & Cai, Fang & Li, Zhou, 1998. "Competition, Policy Burdens, and State-Owned Enterprise Reform," American Economic Review, American Economic Association, vol. 88(2), pages 422-27, May.
  5. Sun, Qian & Tong, Wilson H. S., 2003. "China share issue privatization: the extent of its success," Journal of Financial Economics, Elsevier, vol. 70(2), pages 183-222, November.
  6. Groves, Theodore & Yongmiao Hong & John McMillan & Barry Naughton, 1995. "China's Evolving Managerial Labor Market," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 873-92, August.
  7. Rafael Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 2006. "What Works in Securities Laws?," Journal of Finance, American Finance Association, vol. 61(1), pages 1-32, 02.
  8. Xu, Xiaonian & Wang, Yan, 1999. "Ownership structure and corporate governance in Chinese stock companies," China Economic Review, Elsevier, vol. 10(1), pages 75-98.
  9. Xiaonian Xu & Yan Wang, 1997. "Ownership structure, corporate governance, and corporate performance : the case of Chinese stock companies," Policy Research Working Paper Series 1794, The World Bank.
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Citations

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Cited by:
  1. Liu, Chunyan & Uchida, Konari & Yang, Yufeng, 2014. "Controlling shareholder, split-share structure reform and cash dividend payments in China," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 339-357.
  2. Ye, Dezhu & Liu, Shasha & Kong, Dongmin, 2013. "Do efforts on energy saving enhance firm values? Evidence from China's stock market," Energy Economics, Elsevier, vol. 40(C), pages 360-369.

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