Social trust environment and tunneling

Shihua Chen, Xu Han and Khalil Jebran

Journal of Contemporary Accounting and Economics, 2020, vol. 16, issue 3

Abstract: We show how social trust environment influences tunneling. Using social norm theory, we argue that a high social trust environment mitigates unethical behavior from controlling shareholders and reduces tunneling. We further assume that the association between social trust and tunneling is weaker for enterprises controlled by the state and for those located in regions of high legal development. Using a sample of Chinese listed firms from 2003 to 2016, we find supportive evidence for our hypotheses. Similar conclusions were obtained with alternative measures, endogeneity corrections, and additional analyses. Our findings suggest that as a social norm, social trust can serve as an alternative mechanism for reducing agency problems in an emerging economy.

Keywords: China; Legal development; Social trust; State-owned firms; Tunneling (search for similar items in EconPapers)
JEL-codes: G30 M41 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1815566920300266
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:jocaae:v:16:y:2020:i:3:s1815566920300266

DOI: 10.1016/j.jcae.2020.100212

Access Statistics for this article

Journal of Contemporary Accounting and Economics is currently edited by Agnes C.S. Cheng, P. Clarkson, F.A. Gul, Zoltan Matolcsy, Dan Simunic and Ben Srinidhi

More articles in Journal of Contemporary Accounting and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().