In an environment where concentrated share ownership is the norm, we ask whether Majority-of-the-Minority (MoM) votes curb controlling shareholder overreach and investment inefficiency. We consider MoM votes on controller-based related party transactions in China. Such votes give minority parties potential veto power. We report strong association between shareholder disapprovals on controller-based investment related MoM proposals and the underlying entity's investment plans. This association is robust to a battery of tests, including assessment of pre-vote consultation between minority and controlling shareholders and an exogenous regulatory shock. We also report increased likelihood of informal securities enforcements in the year following MoM shareholder disapproval.

The present research enterprise addresses the efficacy of securities enforcement in China in relation to listed firms' restatement of annual reports. We conjecture that securities enforcement induces greater care and prudence in disclosure, thus lessening the prospect of subsequent restatement. The evidence in the present inquiry strongly supports this premise. Our focus is on informal enforcements. Significantly, SOEs are more responsive than non-SOEs in arresting reporting deficiencies. In contrast to a narrative of regulatory capture, SOE decision-makers' political connections cement, rather than deter, compliance with state-based enforcements. Additionally, the two mainland exchanges impart stronger effect on disclosure quality than either central or local security bureaus. In relation to governance, independent directors exert little to no effect on year-on-year changes in restatement activities. Overall, we report that Chinese regulatory enforcement has become increasingly effective in raising disclosure standards. We surmise that learning and resource-based effects underlie this outcome.