Journal of Business Ethics

, Volume 125, Issue 2, pp 299–327 | Cite as

Does Religion Mitigate Tunneling? Evidence from Chinese Buddhism

  • Xingqiang Du


In the Chinese stock market, controlling shareholders often use inter-corporate loans to expropriate a great amount of cash from listed firms, through a process called “tunneling.” Using a sample of 10,170 firm-year observations from the Chinese stock market for the period of 2001–2010, I examine whether and how Buddhism, China’s most influential religion, can mitigate tunneling. In particular, using firm-level Buddhism data, measured as the number of Buddhist monasteries within a certain radius around Chinese listed firms’ registered addresses, this study provides strong evidence that Buddhism intensity is significantly negatively associated with tunneling. This finding is consistent with the view that Buddhism has important influence on corporate behavior and can serve as a set of social norms and/or an alternative mechanism to mitigate controlling shareholders’ unethical tunneling behavior. In addition, my findings also reveal that the negative association between Buddhism intensity and tunneling is attenuated for firms that have high analyst coverage. The results are robust to various measures of Buddhism intensity and a variety of sensitivity tests.


Religion Buddhism Buddhism intensity Tunneling The controlling shareholder Analyst coverage Business ethics Culture Confucianism China 



I am especially grateful to the section editor (Prof. Domènec Melé) and two anonymous reviewers for their many insightful and constructive suggestions. I appreciate constructive comments from Quan Zeng, Yingjie Du, Wentao Feng, Hongmei Pei, Jianhua Guo, Wei Jian, Guohua Jiang, Donghua Chen, Feng Liu, Shaojuan Lai, Yingying Chang, Jun Lu, and participants of my presentations at Xiamen University, Anhui University, Ocean University of China, and Shanghai University. I acknowledge the National Natural Science Foundation of China (Approval Number: 71072053), the Key Project of Key Research Institute of Humanities and Social Science in Ministry of Education (Approval Number: 13JJD790027), and the Specialized Research Fund for the Doctoral Program of Higher Education of China (Approval Number: 20120121110007) for financial support.


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© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  1. 1.Accounting Department, School of ManagementXiamen UniversityXiamenChina

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