This paper develops an empirical technique to quantify tunneling, a practice where controlling shareholders divert resources from companies with fewer cash flow rights to those with more. The authors use performance shocks to different firms within a group to map resource flows and measure the extent of tunneling. Applying this method to Indian business groups, they find significant tunneling, with lower-ranked firms responding less to shocks and higher-ranked firms showing more sensitivity to shocks from lower-ranked firms. The results suggest that equity prices partly reflect the extent of tunneling. The study also examines the balance sheet items where tunneling occurs and whether market valuation reflects the tunneling extent.This paper develops an empirical technique to quantify tunneling, a practice where controlling shareholders divert resources from companies with fewer cash flow rights to those with more. The authors use performance shocks to different firms within a group to map resource flows and measure the extent of tunneling. Applying this method to Indian business groups, they find significant tunneling, with lower-ranked firms responding less to shocks and higher-ranked firms showing more sensitivity to shocks from lower-ranked firms. The results suggest that equity prices partly reflect the extent of tunneling. The study also examines the balance sheet items where tunneling occurs and whether market valuation reflects the tunneling extent.