Hi, this is Ayoob,
I have started work on tunneling and propping up and its impact on firm's performance. As it is my thesis-1.
To investigate the existence of "Tunneling and Propping up" in Pyaramids business structures (Groups ownerships) in Pakistan, and how the Ultimate Owners (majority share holders) expropriate the money of minority shareholders.
As it is indicated in many researches that, those countries where there is weak legal system for the protection of minority shareholders there usually it happens.
Tunneling is described as the transfer of resources by controlled shareholders from the lower down the firm in pyaramid. i.e:
1.To take or give loans on lower or higher intrest rates.
2.To sale outputs or purchases of inputs at price which is different from market price, ete....
Propping is defined as when enterpreneur injects their private funds in the firm to save the firm from difficult situation or may be at the time when it is on verge of bankruptcy.
It is ultimately beneficial for both majority and minority shareholders, but here million dollar question is that why majority share holder is injecting his private money, the answer is simple. If he/she save the firm today then in future it will tunnel easily because the firm will generate more returns.
However, propping up is clandestine, but literature indicates its existence.
Please make me more clear about the topic and ways how to carryout the research and literatures review.
Thanks
No, Sir that's not related with mining, I'm working in context of Corporante finance, where tunneling is being done in business where structure group of companies are very complicated.
