Influence of Board of Directors` Networks on Shareholders` Tunneling Behavior

Connections between the members of the Boards of Directors of various companies can provide a number of advantages, one of which - the prevention of illegal use of the assets by the company's shareholders, the so-called "tunneling behavior". This work examines Board of Directors networks as their direct links between each other. Current paper examines the role of the centrality of independent Board members - an indicator characterizing the degree and quality of the interactions in the network of directors, as well as the role of public ownership of the company in preventing the "tunneling behavior". The practical contribution of this work is examination the network of interactions on a sample of Russian companies belonging to various industries. The empirical results of the regression analysis show that the illegal use of assets by the company's controlling shareholders negatively depends on the network centrality of the Board members. Thus, a strong and high-quality communication between directors can reduce the risk of illegal use of the assets by controlling shareholders.