In our paper, A Reexamination of Tunneling and Business Groups: New Data and New Methods, which was recently made publicly available on SSRN, we look at emerging economies in general and at India in particular and argue for a simultaneous analysis of corporate governance and strategic activity differences in order to reveal the true quality of firm-level corporate governance.

The last decade of corporate governance research has been focused in large part on identifying what leads to superior or deficient corporate governance in emerging economies, and we think the conventional wisdom about the economically important topics of tunneling and business groups will need to be significantly questioned and reformulated in light of new findings, data, and methodology presented here. We propose the idea that firms’ corporate governance and firms’ strategic business activities within an industry are interlinked, and that only by conducting a simultaneous economic analysis of business strategy and corporate governance can scholars fully discern the quality of a firm’s governance. We advance this idea by taking a fresh look at one of the most rigorous extant methodologies for detecting “tunneling,” or efforts by firms’ controlling owner-managers to take money for themselves at the expense of minority shareholders.

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