Tunneling and Monitoring in Chinese Share Market

Zhong Qin and Qiao Wang

Research in World Economy, 2013, vol. 4, issue 2, 28-35

Abstract: There has been ample evidence suggesting that ¡°tunneling¡± or expropriation of minority shareholders by the controlling shareholders has been a serious problem in the share market in China. This remains the case, despite the fact that the share division arrangement has been discontinued, and shares owned by different shareholders are now treated equally in share market (full circulation). Empirical studies suggest that improved legal protection of investors and enhanced regulation are efficient and essential measures to restrict tunneling. There are, however, few studies that have explored this topic theoretically. Aiming to fill this gap in the literature, this paper sets up a mixed-strategy game between the regulator (the China Securities Regulatory Commission (CSRC)) and a controlling shareholder of a representative company to analyze the strategies of both sides and investigate factors that may curb tunneling. Based on the model, recommendations on how to restrict expropriation of minority shareholders are presented. Results from this model provide theoretical support for empirical studies.

Keywords: tunneling; regulation; game theory; China (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciedu.ca/journal/index.php/rwe/article/view/2997/1775 (application/pdf)
http://www.sciedu.ca/journal/index.php/rwe/article/view/2997 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jfr:rwe111:v:4:y:2013:i:2:p:28-35

Access Statistics for this article

Research in World Economy is currently edited by Gina Perry

More articles in Research in World Economy from Research in World Economy, Sciedu Press
Bibliographic data for series maintained by Gina Perry ().