Tunneling and Propping: A Justification for Pyramidal Ownership

This paper presents a formal model of tunneling and propping
in a pyramidal ownership structure. Tunneling refers to controlling
shareholders shifting resources from one firm to another in the same
pyramid. Propping is tunneling that is done to save the receiving
firm from bankruptcy. We compare the pyramidal ownership
structure to the horizontal ownership structure, in which shifting
resources between firms is not possible (i.e. illegal). We show that
tunneling may justify the pyramidal structure only in the presence
of myopic investors or in combination with propping

	04e29.pdf

Meer informatie in de catalogus
Meer informatie in Picarta