Topic: Does Granting Minority Shareholders Direct Control over Corporate Decisions Help Reduce Value Decreasing Corporate Decisions in Firms with Concentrated Share Ownership? A Natural Experiment from China
Presenter：Zhihong Chen, Assistant Professor in Accounting, City University of Hong Kong
Time: December 3, 2010（Friday）3:00—4:30PM
Venue: Room 501, Jiageng Bld 2
Chair： Zhe Shenm, assistant professor in finance, IFAS
Abstract：
Using a 2004 Chinese securities regulation that requires equity offering proposals to seek the separate approval of minority shareholders, we examine whether giving minority shareholders direct control over corporate decisions helps reduce value decreasing corporate decisions in firms with concentrated share ownership. We find that the regulation deters management from submitting value decreasing equity offering proposals in firms with higher mutual fund ownership but not in firms with higher ownership by either other institutions or individuals. There is also weak evidence that minority shareholders are more likely to veto value decreasing equity offering proposals in firms with higher mutual fund ownership in the post-regulation period. Overall, our evidence suggests that the effect of granting minority shareholders direct control over corporate decisions on the quality of corporate decisions depends on the composition of minority shareholders.
Presenter Introduction：
Dr. Chen Zhihong’s research interests include Accounting information, disclosure, market effiiciency; Corporate governance and Executive pay; and Cost of capital.
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