Can Internal Governance Mechanisms Prevent Asset Appropriation? Examination of Type I Tunneling in China

38 Pages Posted: 12 Jan 2012

See all articles by Yuan George Shan

Yuan George Shan

The University of Western Australia - UWA Business School

Multiple version iconThere are 2 versions of this paper

Date Written: January 9, 2012

Abstract

Using a sample of 117 Chinese listed companies with a total of 540 firm-year observations during the important period of regulatory change and organizational reform between 2001 and 2005, this study aims to investigate whether Type I tunneling is affected by the internal governance mechanisms (IGMs) from the perspective of principal-principal (P-P) conflict between controlling shareholders and minority shareholders. Our findings suggest that state ownership and board of directors‟ meeting are positively correlated with direct transferring of Type I tunneling, but size of board of directors and number of independent directors reveal a negative association. Other IGMs including foreign ownership, supervisory board size, number of professional supervisors and supervisory board meeting were found to have no impact.

Keywords: Type I tunneling, internal governance mechanisms, corporate governance, China

JEL Classification: G34, M41, L25

Suggested Citation

Shan, Yuan George, Can Internal Governance Mechanisms Prevent Asset Appropriation? Examination of Type I Tunneling in China (January 9, 2012). 2012 Financial Markets & Corporate Governance Conference. Available at SSRN: https://ssrn.com/abstract=1982254 or http://dx.doi.org/10.2139/ssrn.1982254

Yuan George Shan (Contact Author)

The University of Western Australia - UWA Business School ( email )

Crawley, Western Australia 6009
Australia

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