IDEAS home Printed from https://ideas.repec.org/a/wsi/rpbfmp/v25y2022i02ns021909152250014x.html
   My bibliography  Save this article

A Game of Power or Discipline: Minority Shareholders’ Activism in China

Author

Listed:
  • Rui Sun

    (School of Accounting, Shanghai Lixin University of Accounting and Finance, 2800 Wenxiang Road, Songjiang District, Shanghai 201620, China)

Abstract

This paper examines 781 proposals sponsored by minority shareholders of Chinese listed companies since the Company Law was revised in 2005, which made proposals more accessible to smaller shareholders. I find that the shareholder structure is essential for minority shareholders to target a company. When the controlling ownership is smaller and minority ownership is relatively larger, a company is more likely to be targeted by minority shareholders’ proposals (MSPs). There is also evidence that minority shareholders target poor performers, but that only happens when the shareholder structure is optimal for minority shareholders to initiate activism. Power, in the form of ownership and identity, dominates the probability of activism behavior. The passage of MSPs heavily depends on whether the proposal is friendly to the management, the identity of the sponsor, and the issues involved. Being targeted by MSPs are often followed by forced top management turnover, but there are no performance improvements in the medium term. Minority shareholders’ activism is more of a game of power.

Suggested Citation

  • Rui Sun, 2022. "A Game of Power or Discipline: Minority Shareholders’ Activism in China," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 25(02), pages 1-57, June.
    • Handle: RePEc:wsi:rpbfmp:v:25:y:2022:i:02:n:s021909152250014x
    DOI: 10.1142/S021909152250014X
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S021909152250014X
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S021909152250014X?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:rpbfmp:v:25:y:2022:i:02:n:s021909152250014x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/rpbfmp/rpbfmp.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.