Premium
Shareholder voting in China: The role of large shareholders and institutional investors
Author(s) -
Song Shunlin,
Xu Xin,
Yi Yang
Publication year - 2020
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/corg.12303
Subject(s) - shareholder , voting , institutional investor , corporate governance , business , accounting , insider , china , proxy voting , disapproval voting , finance , political science , law , politics
Manuscript Type Empirical Research Question/Issue Shareholders of nearly every company are given the right to vote, yet relatively little is known about the determinants of their voting behavior. Unique data in China render the votes of large shareholders observable, providing a rare opportunity to study the determinants of shareholder voting. Research Findings/Insights We find that (a) large shareholders are significantly less likely to vote against reform proposals than small shareholders and (b) institutional investors—especially mutual funds (the largest institutional investors in China)—are significantly less likely to vote against proposals than individual investors. Theoretical/Academic Implications We provide strong evidence for insider intervention in the voting process. Our study also adds to the understanding of voting behavior of large shareholders and institutional investors along with their governance roles in countries with weak legal protection for investors. Practitioner/Policy Implications To improve the governance role of shareholder voting in countries with weak investor protection, it is necessary to strengthen the level of disclosure and supervision of shareholder voting decisions.