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The impact of economic policy uncertainty on controlling shareholder tunneling behavior and governance mechanisms

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  • Li, Jinglong
  • Dai, Wei

Abstract

Based on data from China's A-share listed companies spanning from 2017 to 2023, this paper examines the impact of economic uncertainty on the tunneling behavior of controlling shareholders. The findings reveal that as economic policy uncertainty increases, the tunneling behavior of controlling shareholders tends to exhibit an upward trend. However, the nature of state-owned enterprises (SOEs) can effectively mitigate the tunneling effect of such uncertainty, thereby safeguarding the interests of shareholders and the company. Furthermore, a larger board of directors can reduce the tunneling behavior of controlling shareholders triggered by economic policy uncertainty in an environment characterized by high external uncertainty.

Suggested Citation

  • Li, Jinglong & Dai, Wei, 2025. "The impact of economic policy uncertainty on controlling shareholder tunneling behavior and governance mechanisms," Finance Research Letters, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:finlet:v:82:y:2025:i:c:s1544612325007883
    DOI: 10.1016/j.frl.2025.107529
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