Extraction of private benefits of control by families: tunnelling and trading in a private information environment

Zhang, Xiaoxiang, Filatotchev, Igor and Piesse, Jenifer (2011) Extraction of private benefits of control by families: tunnelling and trading in a private information environment. Cass Business School EMG conference, London, 2011. Published in: Cass Business School EMG conference.

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Abstract

Using a sample of Hong Kong listed companies we investigate how private benefits of control are extracted by a family via tunnelling and trading in shares. We find that family ownership is associated with entrenchment/liquidity-using effects, leading to tunnelling and trading by families. Family board overrepresentation is associated with entrenchment/liquidity-restricting effects, facilitating tunnelling but limiting market scrutiny via informed trading. Family board leadership leads to monitoring/liquidity-promoting effects that prevent tunnelling and promote the price discovery process. These effects differ between founder and heir-families. Tunnelling and trading are two independent mechanisms of rent extraction even after controlling for endogeneity.

Item Type: Conference Proceedings
Schools and Departments: University of Sussex Business School > Accounting and Finance
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 01 Mar 2022 09:27
Last Modified: 01 Mar 2022 09:29
URI: http://sro.sussex.ac.uk/id/eprint/104639

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