Abstract: Using executives who are also discipline commission members as a proxy variable for executive integrity, this paper uses A-share state-owned listed companies in China ’s capital market from 2011 to 2017 as samples to test the role of executive integrity in corporate governance from the perspective of major shareholders’ tunneling. The research shows that executive integrity can significantly inhibit major shareholders’ tunneling behaviors. And the higher level of integrity executives have, the more effectively major shareholders’ tunneling will be restrained. This restraint is more obvious in local SOEs than in central SOEs. Further testing based on economic consequences reveals that executive integrity reduces business risk, and major shareholders’ tunneling play a partial mediating role in the above process. The above results show that integrity of executive plays an active role in corporate governance, which is conducive to protecting investors’ interests and reducing business risks. This paper contributes to the literature that focuses on the factors influencing shareholders’ tunneling, and provides a direct empirical evidence for governance effects of executive integrity.

Key words: executive integrity, major shareholders’ tunneling, SOEs, nature of SOEs, business risks