FAMILY-OWNED FIRMS AND TUNNELING EFFECT: AN EVIDENCE FROM SOUTH ASIAN, LOWER-MIDDLE INCOME, FRONTIER MARKET INDEX ECONOMY

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Abstract

Research is focused to investigate an impact of family ownership (FOwn) on asset or general tunneling (TunG) and cash flow tunneling (TunCF). Focus of research is evaluate role of corporate governance (CG) as moderator within relationship of family ownership and tunneling. Theoretical relationship between tunneling, corporate governance and tunneling is established thorough an extensive literature review. Theoretical relationship is confirmed through data analytical techniques. For the purpose to evaluate hypothetical relationship, annual data for 98 non-financial firms for the period of 14 years (2006-2019) is gathered from Dhaka Stock Exchange. Collected data is then analyzed to verify hypothetical findings. To resolve issue of endogeneity, Generalized Method of Moments (GMM) is applied as an analytical tool. Results confirmed that family ownership impacts tunneling activities. Moreover, corporate governance play moderating role in the relationship of family ownership and tunneling. Research provided an insight to all stakeholders, including investors to make investment decision, regulators to regulate market, and policymakers to formulate strategies and policies to protect minority shareholders. Limitations and future aspects of this research are also elaborated

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