Rescue one and sacrifice others? Corporate tunneling phenomenon under China's new delisting regulations

Yaling Li, Jin Lu and Dengxi Wei

Finance Research Letters, 2024, vol. 67, issue PB

Abstract: This paper investigates the spillover effects of the new delisting regulations on normally-listed affiliates from the perspective of controlling shareholders' tunneling behavior. We find that after the implementation of new delisting regulations, there is a significant rise in related-party transactions among normally-listed firms when other affiliated firms within the same business group face delisting threats. Our findings indicate that the new regulations exacerbate the concerns about delisting, compelling controlling shareholders to engage in tunneling behaviors within normally-listed affiliates and to redirect resources to the delisting-threatened firms. This study indicates how stringent regulations affect shareholders' behaviors and intensify agency conflicts.

Keywords: Delisting regulations; Tunneling; Related-party transactions (search for similar items in EconPapers)
JEL-codes: G32 G34 G38 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324008973
Full text for ScienceDirect subscribers only

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:eee:finlet:v:67:y:2024:i:pb:s1544612324008973

DOI: 10.1016/j.frl.2024.105867

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().