Ultimate parent's board reform and controlling shareholder entrenchment: Evidence from a quasi-natural experiment in China

Guilong Cai, Sujuan Xie, Yue Xu, Yamin Zeng and Junsheng Zhang

Emerging Markets Review, 2019, vol. 38, issue C, 389-403

Abstract: This paper examines whether the strengthening of board monitoring at the level of the ultimate parent company reduces their expropriation from the listed subsidiaries. Using a quasi-natural experiment in China, we find that a high presence of outside directors on the ultimate parent company significantly reduce the parent company's tunneling from listed subsidiaries. Furthermore, the ultimate parent's board monitoring in reducing the tunneling is more salient when the ultimate parent company has strong management control in listed subsidiaries and complicated pyramid ownership structure in the listed subsidiaries.

Keywords: Board reform; Outside director (search for similar items in EconPapers)
JEL-codes: G32 G34 G38 M41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:38:y:2019:i:c:p:389-403

DOI: 10.1016/j.ememar.2018.11.002

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