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<p>Leveraging the unique setting of concentrated ownership structures among Chinese listed firms, we investigate the governance role of common ownership. We find a significant negative correlation between common ownership and tunneling. Mechanism tests indicate that common ownership constrains tunneling through both information and supervisory mechanisms. Our results remain robust after employing difference-in-differences analysis, Heckman two-stage estimation, and instrumental variables analysis. Our findings further demonstrate that common ownership mitigates collusion between controlling shareholders and executives. Furthermore, our analysis of economic consequences reveals that common ownership reduces the risk of stock price crashes. Taken together, our results suggest that common ownership provides informational advantages and stronger governance incentives, which helps to prevent tunneling and protect minority shareholders.</p>

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Dose common institutional ownership constrain tunneling?

  • 期刊论文

  • 发表日期：

    2025年6月2日

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  • Anting Li,
  • Jianqiong Wang,
  • Yaru Yang

摘要

Leveraging the unique setting of concentrated ownership structures among Chinese listed firms, we investigate the governance role of common ownership. We find a significant negative correlation between common ownership and tunneling. Mechanism tests indicate that common ownership constrains tunneling through both information and supervisory mechanisms. Our results remain robust after employing difference-in-differences analysis, Heckman two-stage estimation, and instrumental variables analysis. Our findings further demonstrate that common ownership mitigates collusion between controlling shareholders and executives. Furthermore, our analysis of economic consequences reveals that common ownership reduces the risk of stock price crashes. Taken together, our results suggest that common ownership provides informational advantages and stronger governance incentives, which helps to prevent tunneling and protect minority shareholders.