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 a new research project co-directed with Professor Tobias Tröger (Goethe Universität, Frankfurt) and generously funded, among others, by SAFE Frankfurt, Professor Luca Enriques will bring 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. Confirmed contributors to the project, who will meet in Oxford for an authors workshop and will present their work at a conference in Frankfurt in 2017, include Paul Davies, Zohar Goshen (Columbia Law School), Geneviève Helleringer, Woochan Kim (Korea University Business School), Curtis Milhaupt (Columbia Law School), Mariana Pargendler (FGV, Sao Paulo), Ed Rock (University of Pennsylvania), Kristin Van Zwieten, and Luigi Zingales (University of Chicago Stern Business School).