Does Family Ownership Matter in Tunneling? Moderating Role of Corporate Governance.

Abstract

This research empirically examines the impact of family ownership (FO) on tunneling (Tun) and moderating role of corporate governance (CG). The relationship between family ownership, tunneling, and corporate governance as moderators was established after an extensive literature review. The generalized Method of Moments (GMM) is applied to the data collected from 200 non-financial firms for 14 years (2009-2023) listed at National Stock Exchange (NSX) India. The empirical analysis confirmed that family ownership impacts tunneling activities, while corporate governance acts as a moderator between family ownership and tunneling. Hence, this study theoretically contributed by highlighting the Type-II agency conflict between controlling shareholders of family-owned firms and minority shareholders. This study also provides insight to investors, policymakers, regulators, and watchdog groups of minority shareholders to assess expropriation issues and formulate strategies and policies for protecting their rights.