Ferreting Out Tunneling: An Application to Indian Business Groups / Marianne Bertrand, Paras Mehta, Sendhil Mullainathan.

Format:

Book

Author/Creator:

Bertrand, Marianne.

Contributor:

National Bureau of Economic Research.

Mehta, Paras.

Mullainathan, Sendhil.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7952.

NBER working paper series no. w7952

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Ferreting Out Tunneling

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2000.

Summary:

In many countries, controlling shareholders are accused of tunneling, transferring resources from companies where they have few cash flow rights to ones where they have more cash flow rights. Quantifying the extent of such tunneling, however, has proven difficult because of its illicit nature. This paper develops a general empirical technique for quantifying tunneling. We use the responses of different firms to performance shocks to map out the flow of resources within a group of firms and to quantify the extent to which the marginal dollar is tunneled. We apply our technique to data on Indian business groups. The results suggest a significant amount of tunneling between firms in these groups.

Notes:

Print version record

October 2000.