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Tunnelling

Author

Listed:
  • Simon Johnson
  • Rafael La Porta
  • Florencio Lopez-de-Silanes
  • Andrei Shleifer

Abstract

Tunnelling is defined as the transfer of assets and profits out of firms for the benefit of their controlling shareholders. We describe the various forms that tunnelling can take, and examine under what circumstances it is legal. We discuss two important legal principles--the duty of care and the duty of loyalty--which courts use to analyze involving tunnelling. Several important legal cases from France, Belgium, and Italy illustrate how and why the law accommodaates tunnelling in civil law countries, and why certain kinds of tunnelling are less likely to pass legal scrutiny in common law countries.

Suggested Citation

  • Simon Johnson & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1999. "Tunnelling," Harvard Institute of Economic Research Working Papers 1887, Harvard - Institute of Economic Research.
    • Handle: RePEc:fth:harver:1887
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    File URL: ftp://ftp.repec.org/RePEc/fth/harver/hier1887.pdf
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    Other versions of this item:

    • Simon Johnson & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2000. "Tunnelling," NBER Working Papers 7523, National Bureau of Economic Research, Inc.
    • Johnson, Simon & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2000. "Tunneling," Scholarly Articles 30747165, Harvard University Department of Economics.

    References listed on IDEAS

    as
    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
    2. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    3. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    4. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    5. Kevin Keasey & Steve Thompson & Mike Wright (ed.), 1999. "Corporate Governance," Books, Edward Elgar Publishing, volume 0, number 1708.
    6. Johnson, Simon & Boone, Peter & Breach, Alasdair & Friedman, Eric, 2000. "Corporate governance in the Asian financial crisis," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 141-186.
    7. Simon Johnson & Andrei Shleifer, 1999. "Coase v. the Coasians," Harvard Institute of Economic Research Working Papers 1885, Harvard - Institute of Economic Research.
    8. Vives,Xavier (ed.), 2000. "Corporate Governance," Cambridge Books, Cambridge University Press, number 9780521781640.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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