Cognitive Scaffold

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MENTAL MODEL · M5489

Tunneling

Tunneling
BusinessHigh supportFinance
Included
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

Controlling shareholders (major shareholders) use covert means such as related-party transactions and asset transfers to secretly transfer the company's assets or profits to other companies they control, like digging a tunnel, thereby harming the interests of minority shareholders.

SCAFFOLDING EFFECT

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Insider expropriation. When investing or partnering, do not only look at the surface profits on financial statements. Keep an eye on the "tunnel"—related-party transactions, guarantees, and intercompany loans. Those are the hidden channels where value leaks out.

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Controlling shareholders use hidden channels such as related-party transactions, guarantees, and intercompany loans to transfer company benefits to entities they control, hollowing out the company and harming minority shareholders.

MINIMUM ACTION

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Source support: Explicit

  • link
    en.wikipedia.orghttps://en.wikipedia.org/wiki/TunnelingZH · Explicit
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