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

Jinglong Li and Wei Dai

Finance Research Letters, 2025, vol. 82, issue C

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.

Keywords: Tunneling behavior; Economic policy uncertainty; Nature of property rights; Board size (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:82:y:2025:i:c:s1544612325007883

DOI: 10.1016/j.frl.2025.107529

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