Does the deleveraging policy exacerbate tunneling? Empirical evidence from China

This study investigates the impact of the deleveraging policy on tunneling, using China's A-share listed firms. The deleveraging policy exacerbates tunneling and the result is robust after a series of tests. Further investigations show that tunneling of listed companies by non-state-owned controlling shareholders is particularly significant and audit opinions fail to reflect and inhibit tunneling. A way for large shareholders' tunneling under deleveraging is collusion with management.