Ferreting out Tunneling: An Application to Indian Business Groups

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ID: 291585
2002
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Abstract
Owners of business groups are often accused of expropriating minority shareholders by tunneling resources from firms where they have low cash flow rights to firms where they have high cash flow rights. In this paper we propose a general methodology to measure the extent of tunneling activities. The methodology rests on isolating and then testing the distinctive implications of the tunneling hypothesis for the propagation of earnings shocks across firms within a group. When we apply our methodology to data on Indian business groups, we find a significant amount of tunneling, much of it occurring via nonoperating components of profit.
Reference Key
openalex_W2115927074 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Bertrand Moine, P.K. Mehta, Sendhil Mullainathan
Journal the quarterly journal of economics
Year 2002
DOI
10.1162/003355302753399463
URL
https://doi.org/10.1162/003355302753399463
Keywords Keywords not found

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