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If you Give Shareholders Power, do they Use it? An Empirical Analysis

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  • Yair Listokin

Abstract

Many commentators assert that enhanced shareholder power is a promising cure for corporate governance ills. This paper empirically examines the impact of differential amounts of shareholder power on governance arrangements. When U.S. states enacted statutory antitakeover protections in the 1980s, the states differed in the power granted to shareholders to opt out of the antitakeover protections without agreement by the board of directors. These differences in shareholder power are associated with little change in governance arrangements. The results suggest that simply altering shareholder power without changing other governance mechanisms is unlikely to lead to widespread changes in corporate governance.

Suggested Citation

  • Yair Listokin, 2010. "If you Give Shareholders Power, do they Use it? An Empirical Analysis," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(1), pages 38-53, March.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201003)166:1_38:iygspd_2.0.tx_2-n
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    References listed on IDEAS

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    1. Lucian Arye Bebchuk & Assaf Hamdani, 2002. "Optimal Defaults for Corporate Law Evolution," NBER Working Papers 8703, National Bureau of Economic Research, Inc.
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    3. Yair Listokin, 2009. "What Do Corporate Default Rules and Menus Do? An Empirical Examination," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 6(2), pages 279-308, June.
    4. Karpoff, Jonathan M. & Malatesta, Paul H., 1989. "The wealth effects of second-generation state takeover legislation," Journal of Financial Economics, Elsevier, vol. 25(2), pages 291-322, December.
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    Cited by:

    1. Wang, Qiong & Qiu, Muqing, 2023. "Strength in numbers: Minority shareholders' participation and executives' pay-performance sensitivity," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    2. Ge, Wenxia & Ouyang, Caiyue & Shi, Zhenyang & Chen, Zhanliao, 2022. "Can a not-for-profit minority institutional shareholder make a big difference in corporate governance? A quasi-natural experiment," Journal of Corporate Finance, Elsevier, vol. 72(C).
    3. Cao, Qingzi & Fang, Ming & Pan, Yuying, 2022. "Minority shareholders protection and corporate financial leverage: Evidence from a natural experiment in China," Pacific-Basin Finance Journal, Elsevier, vol. 73(C).
    4. Chuanzi Guo & Minghua Gao & Junyi Li, 2023. "Research on the Role of Minority Shareholders in State-Owned Enterprises Based on Big Data," Sustainability, MDPI, vol. 15(3), pages 1-18, January.
    5. Cui, Xin & Wen, Lulu & Huang, Kai & Li, Jiayi, 2024. "Free riding or participation in governance: Minority shareholders’ online voting and corporate responsiveness," Research in International Business and Finance, Elsevier, vol. 70(PB).
    6. Kenworthey Bilz, 2010. "Defending the (Mis)use of Statistics in Law," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(1), pages 194-198, March.
    7. Wang, Qiong & Qiu, Muqing, 2023. "Minority shareholders' activism and stock price crash risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 87(C).
    8. Simon Deakin, 2010. "Understanding Corporate Governance Default Rules," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(1), pages 54-57, March.
    9. Cain, Matthew D. & McKeon, Stephen B. & Solomon, Steven Davidoff, 2017. "Do takeover laws matter? Evidence from five decades of hostile takeovers," Journal of Financial Economics, Elsevier, vol. 124(3), pages 464-485.
    10. Lu, Qiaoshan & Xiang, Cheng & Li, Bingxiang & Feng, Lixuan, 2023. "Non-controlling shareholders' governance participation and corporate misconduct: Evidence from voting in general meetings," Pacific-Basin Finance Journal, Elsevier, vol. 81(C).

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    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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