The dark side of strengthened minority voting power: An innovation perspective

Abstract

Based on the 2014 regulatory reforms aimed at strengthening the protection of legitimate rights and interests of minority investors in China, we investigate minority shareholders’ short‐termism and how minority voting impacts firm innovation. We find that the 2014 reforms effectively motivate minority shareholders to attend shareholder meetings and greatly enhance their voting influence. We also find that enhanced minority voting power after the reforms lowers the number of firms’ patent applications, and this effect is more pronounced for the firms that see the greatest increase in shareholder attendance at shareholder meetings. Moreover, enhanced minority voting power boosts executive turnover‐performance sensitivity, thereby undermining firm innovation. Finally, we show that different types of minority shareholders have distinct impacts on firm innovation, depending on their investment horizons. The negative effect of minority voting power is more pronounced for state‐owned enterprises (SOEs) than for non‐SOEs.

Does corporate ESG disclosure enhance investor relationship management? Evidence from China

“…Accordingly, we further investigate the impact of the institutional environment of their regions and internal equity structure within firms on the relationship between ESG disclosure and investor relations management. Existing studies largely agree that in a well‐established institutional environment, investors benefit from higher protection and a stronger sense of shareholder sovereignty (Lopez Iturriaga & Lopez‐Millan, 2017; Walker et al., 2019; Zhang et al., 2022), while it is controversial whether large or minority shareholders play a positive or negative role in corporate governance (Jia et al., 2018; Li et al., 2021; Lin et al., 2022; Ouyang & Zhu, 2016; Wang et al., 2021; Yao et al., 2023). Our study finds that the enhancing effect of ESG disclosure on investor relations management is more significant in a sound governance environment and a concentrated shareholding structure.…”