Family Ownership and Tunneling Effect in South Asian, Lower-Middle Income Economies

Syed Muhammad Ali Tirmizi

Abstract:

This research studies the impact of family ownership (FOWN) on tunneling (TUN), while corporate governance (CGI) moderates this relationship. After reviewing the extensive literature, the relationship of family ownership with tunneling and the moderating role of corporate governance has been established. To investigate the empirical status of the hypotheses, data from 198 non-financial firms for 14 years for the period 2006-2019 has been gathered from the Pakistan Stock Exchange and Dhaka Stock Exchange. Generalised Method of Moments (GMM) has been applied to address the problem of endogeneity. The results depict that family ownership has a negative relationship with tunneling (propping). Moreover, corporate governance also shows the moderating role in the influence of family ownership on tunneling. The results of the empirical study provide insight to investors, regulators and policymakers so they may formulate strategies and establish policies to protect the rights of minority shareholders.

research from:

• Foundation University - Faculty of Management Sciences

Year:

2021

Type of Publication:

Article

Keywords:

tunneling; family ownership; Corporate Governance

Journal:

International Journal of Innovation, Creativity and Change

Volume:

15

Number:

5