The quality of corporate governance is a key component of asset allocation. In countries characterized by concentrated ownership, minority shareholder expropriation, also known as tunneling, is the main concern from the perspective of outside investors. Tunneling can be the outcome of a number of expropriation techniques. A common way to extract value from the controlled corporation is for the dominant shareholder to engage in transactions with it at favourable terms (so-called related party transactions).
In this research project, co-directed with Professor Tobias Tröger (Goethe Universität, Frankfurt) and generously funded, among others, by SAFE Frankfurt and ECGRF, Professor Luca Enriques has brought together top legal and finance scholars to reflect upon the role of dominant shareholders in listed firms, tunneling control as a key component to enhance capital market development, and the content and effectiveness of reform efforts undertaken in various jurisdictions to tackle related party transactions. Other contributors to the project, who have met in Oxford for an authors' workshop and have presented their work at a conference in Frankfurt on October 20-21, 2017, are Marcello Bianchi (Assonime), Jens Dammann (University of Texas), Paul Davies, Jesse Fried (Harvard), Zohar Goshen (Columbia Law School), Assaf Hamdani (Tel Aviv University), Geneviève Helleringer, Sang Yop Kang (Beijing University), Kon Sik Kim (Seoul National University), Amir Licht (IDC Herzlyia), Curtis Milhaupt (Stanford Law School), Mateja Milic (Assonime), Alessio M. Pacces (Erasmus University, Rotterdam), Mariana Pargendler (FGV, Sao Paulo), Dan Puchniak (NUS), Ed Rock (NYU), Kristin Van Zwieten, Umakanth Varottil (NUS), and Yishay Yafeh (Hebrew University). The project’s output is the book The Law and Finance of Related Party Transactions, published in 2019 by Cambridge University Press.