Journal of Financial and Quantitative Analysis Vol. 60 No. 2 2025
Governance by One-Lot Shares
open access
Abstract
We use a novel experiment in China to examine the effects of having a quasi-official investor own a small number of shares on specific firm outcomes. We find that, relative to control firms, pilot firms experience an increase in dissenting votes from independent directors, a reduction in tunneling and earnings management activities, and an improvement in merger performance. Independent directors questioned by the quasi-official shareholder in activism events subsequently lose board seats in the director market. Overall, our results shed light on a new mechanism for enhancing the protection of minority shareholders.
- DOI
- 10.1017/s0022109024000516
- Volume
- 60
- Issue
- 2
- Pages
- 874-909
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref