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

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conference contribution
posted on 2023-06-10, 02:46 authored by Xiaoxiang ZhangXiaoxiang Zhang, Igor Filatotchev, Jenifer Piesse
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.

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Publication status

  • Published

File Version

  • Accepted version

Journal

Cass Business School EMG conference

Event name

Cass Business School EMG conference

Event location

London

Event type

conference

Event date

2011

Department affiliated with

  • Accounting and Finance Publications

Full text available

  • Yes

Legacy Posted Date

2022-03-01

First Open Access (FOA) Date

2023-05-25

First Compliant Deposit (FCD) Date

2023-05-25

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