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We examine changes in controlling shareholder holdings, looking for evidence of financial tunneling (unfair wealth transfers from public investors to controlling shareholders). Our sample comprises yearly data during 2000–2011 on 75 large Israeli companies. We find that controlling shareholders are successful in timing the stock market – there exists a significant negative correlation between changes in the mean controlling shareholders’ equity holdings and market return. There is also some evidence that controlling shareholders increase (decrease) their holdings before years of positive (negative) excess returns in their shares. However, statistically significant mean excess returns are documented only after decreases in controlling shareholders’ holdings. Thus, we offer only limited support for the financial tunneling hypothesis.

This paper aims to investigate the interconnections between corporate ownership, tax system and controlling shareholder tunneling through intercorporate loans in an emerging market setting.

China’s Enterprises Income Tax reform in 2008 abolished its previous multiple-tiers tax system under which foreign direct investment (FDI) firms enjoyed preferential tax rates than domestic firms by introducing a new unified-rate tax system. Using difference-in-differences tests, the author analyzes changes of controlling shareholders tunneling through intercorporate loans among Chinese listed companies around this reform.

The author documents significant reductions of intercorporate loans after the reform. More importantly, the author reveals that foreign-invested firms experienced larger reductions of intercorporate loans than domestic firms. The author also shows that state association matters for domestic firms’ response to the reform. In addition, the author documents positive stock market reaction to the tax reform announcement for firms that exhibited higher level of tunneling prior to the reform, indicating market expectation of reduced principal-principal conflict post-reform.

The findings suggest effective corporate governance system is warranted to constrain intercorporate fund transfers in emerging markets where tax incentives are used for attracting inward foreign direct investments. Institutional reforms in emerging markets aimed at removing market frictions can alleviate the problem of controlling shareholder expropriations of minority interests or tunneling.

This is a pioneering study that reveals the role of tax as a public governance mechanism in weak minority investor protection environment.

The purpose of this paper is to develop a life cycle risk management framework for public private partnership (PPP) infrastructure projects that lead to the realization of value for money and balance of interests between different partners including the public and end users.

This paper draws on extensive theoretical research and literature reviews, coupled with case study methodologies. A comprehensive review of current literature in the field was first carried out. Then three PPP infrastructure projects, two from Australia and one from China, are studied to scrutinize reasons leading to their dilemma and articulate the valuable lessons learnt in relation to risk analysis and mitigation.

The paper found that properly assessing risks (financial, government's political and public's acceptance/rejection risks), ensuring value for money and protecting the public (and end users') interests are essential in PPP infrastructure projects and this can only be achieved through optimal risk identification, assessment, allocation and management from a life cycle perspective and balanced interests between the Government/public and private partners as well as product end users.

The paper was limited to proposing the framework; therefore the next step should be testing the framework.

The framework proposed in this paper should be practical and useful for professionals in managing the risks associated with the procurement of PPP infrastructure projects.

The PPP method has been increasingly used to procure large‐scale infrastructures such as freeways, railways, tunnels and bridges worldwide. While there have been many successful PPP projects, unsuccessful cases abound and studying them can help people better manage the risks in future PPP infrastructure projects. To ensure the success of PPP infrastructure projects, it is important for all partners to manage the risks from a project life cycle perspective, in which risks are identified and assessed in the earliest possible project stage and are allocated to the parties who are in the best position to control them. Furthermore, it is also important to continuous monitor the risks and develop proactive risk respond strategies throughout the project life cycle. To this end, this paper provides a life‐cycle risk management framework for PPP infrastructure projects.

Infrastructure projects are expected to deliver value to their stakeholders long after completion. Project value is multi-dimensional and subjective and evolves over the project lifecycle. How stakeholders frame the expected value is central to the public debate about proposed infrastructure projects and influences the financing decisions; however, this framing is inadequately understood. The purpose of this paper is to develop new knowledge for shaping infrastructure projects by identifying the ways in which stakeholders frame project value at the project front end.

Three transport infrastructure projects are compared in a qualitative, document-based study. The authors map the dimensions of value at the project front end and identify stakeholders’ approaches to lifecycle-oriented framing of value.

Financial, social and comparative values are dominant in the project front end. The authors frame value into positive and negative dimensions and identify four themes in the lifecycle-oriented framing of value, including uncertainties, timing of cost and benefit realization, project relations and external sponsorship.

The research is limited through the focus on transport infrastructure projects and project front end only, the selection of cases from a single country and the use of document-based data. The systematic analysis approach has yielded novel analytical frameworks that will be useful for further research.

This study identifies value dimensions that are specific to transport infrastructure projects and proposes a framework to assist stakeholders and project managers to better assess and negotiate value when designing their projects.

Regional and comparative values are revealed as novel aspects of value specific to infrastructure projects. The alternative lifecycle-oriented frames offer a new way to understand and structure the co-creation of value and shape negotiation for investment decisions in the project. A portfolio perspective to investment decision making is proposed.

The purpose of this paper is to conduct life-cycle cost analysis of a short-haul underground freight transportation (UFT) system for the Dallas Fort Worth international airport.

The research approach includes: identifying the cost components of the proposed airport UFT system; estimating life-cycle cost (LCC) of system components using various methods; determining life-cycle cash flows; evaluating the reliability of the results using sensitivity analysis; and assessing the validity of the results using analogues cases.

Although the capital cost of constructing an airport UFT system seems to be the largest cost of such innovative projects, annual costs for running the system are more significant, taking a life-cycle perspective. System administrative cost, tunnel operation and maintenance, and tunnel construction cost are the principle cost components of the UFT system representing approximately 46, 24 and 19 percent of the total LCC, respectively. The shipping cost is estimated to be $4.14 per ton-mile. Although this cost is more than the cost of transporting cargos by trucks, the implementation of UFT systems could be financially justified considering their numerous benefits.

This paper, for the first time, helps capital planners understand the LCC of an airport UFT system with no or limited past experience, and to consider such innovative solutions to address airport congestion issues.

The purpose of this paper is to investigate the effect of ownership structure arising from China’s unique privatization process on listed firms’ tunneling activities and their interaction with tax avoidance.

Using hand-collected data on the incompletely restructured state-owned listed firms and their applicable tax rate, this paper conducts a multivariate regression to test research questions. It also employs a triple differences method to examine whether the observed interaction between tax avoidance and tunneling is mitigated for well-governed firms.

It documents that controlling shareholders’ tunneling increases as the percentage of shares owned by state-owned enterprises (SOEs) increases. Evidence also shows that the magnitude of tunneling increases when SOEs controlled by the central government engage in more tax avoidance, suggesting that these firms use tax avoidance to facilitate wealth expropriation.

These findings advance the understanding of the tunneling incentive behind the tax avoidance behavior for a subset of Chinese SOEs and have implications for emerging capital markets that are characterized by concentrated government ownership and weak corporate governance.

This paper is the first paper to investigate the effect of the incomplete privatization process on tunneling and the interaction between tunneling and tax avoidance activities. It extends prior studies by investigating the incentives behind SOEs’ tax avoidance from the perspective of an agency problem and documenting that good corporate governance plays an important role in deterring the diversionary tax avoidance.

Uncertainty, a state of unknowing linked to threats and opportunities, is a key characteristic of megaprojects, making it challenging for government officials and politicians to decide on their initiation. For them, implementation by the private sector adds an extra layer of complexity and uncertainty to megaproject planning. In this context, only a few studies have focussed on governing and the mobilization of uncertainty arguments in communication between government actors and private developers either in favour of or against megaprojects. The purpose of this article is to shed light on how private megaproject proposals progress towards political acceptance or rejection in public decision-making.

This process of public decision-making on private megaproject proposals is examined in the case of the Helsinki–Tallinn undersea rail tunnel. In line with the interpretive research tradition, the authors’ study draws on a qualitative methodology underpinned by social constructionism. The research process can be characterized as abductive.

The authors’ findings suggest that while public decision-making on megaprojects is a conflictual and dynamic process, some types of uncertainty are relatively more important in affecting the perceived feasibility of the projects in the eyes of public sector decision-makers.

This study contributes to the debate on uncertainty management in megaprojects, proposing a new type of uncertainty – uncertainty about privateness – which has not been explicitly visible thus far.

Based on a sample of 1,435 Vietnamese listed firms over the period from 2005 to 2017, this study examines the sensitivity of unexpected investment to free cash flow and its mechanism.

We tested three hypotheses using two-step system-GMM to investigate investment–cash flow sensitivity for various firm scenarios while accounting for confounding variables.

Firms with negative free cash flow are more likely to engage in underinvestment; conversely, overinvestment is found primarily in firms with positive free cash flow. In terms of the mechanism, while underinvesting decisions are caused mainly by financial constraints, overinvesting behaviour primarily resulted from agency problems, typically in the form of principal-principal conflicts. Interestingly, under the impact of negative cash flow observations, financial constraints tend to decrease investment–cash flow sensitivity. Conversely, the agency costs hypothesis reveals that agency problems are more likely to increase investment–cash flow sensitivity.

These findings not only contribute to the current corporate literature but also provide some important practical implications for stock market investors, corporate managers, and policy-setting bodies, specifically in the Vietnamese market.

This paper aims to investigate the association between political connections and the audit report lag and whether related party transactions moderate the association between the two.

An ordinary least square regression is estimated whereby audit report lag is regressed on political connections, related party transactions and the interaction between the two. Data on the number and amounts of RPTs are hand-collected from audited financial reports. A firm-year observation is politically connected if at least one large shareholder (controlling at least 10 per cent of the votes directly or indirectly) or board member or commissioner is a current or former Member of Parliament, a minister or head of local government or closely related to a politician or party.

Findings show that the audit report lag is relatively short for politically connected firms but increases when such firms conduct both operating and loan-type related party transactions. This suggests that auditors understand the incentives for, and the implications of, related party transactions and hence exert additional audit efforts in scrutinizing financial statements: activities that will increase the audit report lag.

Although a large body of empirical research exists on the determinants of audit report lag, none has examined the impact of political connections. This paper further contributes to the auditing literature by documenting auditors’ evaluation of related party transactions in a developing country.

Under IAS 24 a related party transaction (RPT) is a “transfer of resources, services or obligations between related parties, regardless of whether a price is charged” (IASB). The purpose of this paper is to consider the interest of the business group and the directing activity of the parent company for the interpretation of the RPT. Considering the interest of the group means to interpret the intra-group transactions not as isolated transactions, as usually done by the empirical studies, but in a wider perspective, that of the group.

This paper builds on explanatory multiple case studies in order to answer the following research questions: why the interest of the business group and the directing activity of the subsidiaries by the parent company are important in the interpretation of RPTs. How RPTs can be interpreted in the light of the directing activity of the holding company.

Dominant shareholder tends to demonstrate that the group it is not managed as a single economic entity and sometimes that subsidiaries are not really controlled. The case studies show that a regulation that imposes the transparency of the directing activity has at least two effects: the controlling shareholder finds it convenient to delegate the decision-making power and to not carry out RPTs among firms that do not present clear economic links. Thus, the transparency of the directing activity seems to be a disincentive to the establishment of a pyramidal group with expropriation purposes.

It is appropriate that the interpretation of the RPT take into account not only the disclosure of the RPT (e.g. type and nature), but also the following disclosure: the reason and the business purpose that lead to RPT; the interest of the company in engaging such transactions; and the procedures for their approval. The independence of subsidiaries directors is necessary to ensure the management autonomy of the boards, and in the case of directing activity they have to protect outsiders in the case of detrimental transactions ordered by the controlling and directing company that are not carried out in the interest of the group.

Unlike what has been done so far by the literature on RPT, this paper considers the interest of the group to interpret the intra-group transactions and the separation between control and direction. It means do not interpret RPT as isolated transactions, as usually done by the empirical studies, but in a wider perspective, that of the group.