首页 | 本学科首页   官方微博 | 高级检索  
     检索      


Tunneling or propping: Evidence from connected transactions in China
Authors:Winnie Qian Peng  Zhishu Yang
Institution:
  • a School of Business and Management, Hong Kong University of Science and Technology, Hong Kong
  • b School of Economics and Management, Tsinghua University, China
  • Abstract:Friedman et al. (2003) develop a model in which, in equilibrium, controlling shareholders may choose either tunneling or propping of their listed companies depending on the magnitude of an adverse shock and the magnitude of the private benefits of control. In this paper, we employ connected transaction data from China to test the implications of their model. We hypothesize that, when listed companies are financially healthy (in financial distress), their controlling shareholders are more likely to conduct connected transactions to tunnel (prop up) their listed companies and the market reacts unfavorably (favorably) to the announcement of these transactions. Our empirical findings strongly support our hypotheses. We also find that all of the transaction types in our sample can be used for tunneling or propping depending on different financial situations of the firms. Finally, political connection is negatively associated with the announcement effect. Overall, our analysis supports Friedman et al.'s (2003) model by furnishing clear evidence for propping and tunneling to occur in the same company but at different times.
    Keywords:G34  G32  G38
    本文献已被 ScienceDirect 等数据库收录!
    设为首页 | 免责声明 | 关于勤云 | 加入收藏

    Copyright©北京勤云科技发展有限公司  京ICP备09084417号