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Article
Publication date: 19 April 2011

Aiwu Zhao and Alexander J. Brehm

The purpose of this paper is to investigate whether cumulative voting can help ease the conflicts between board of directors and minority shareholders.

Abstract

Purpose

The purpose of this paper is to investigate whether cumulative voting can help ease the conflicts between board of directors and minority shareholders.

Design/methodology/approach

The authors use voting result of shareholder proposals as an indicator of the level of conflicts between board and minority shareholders. OLS regression and non‐parametric Kruskal‐Wallis tests have been applied in the analysis.

Findings

It was found that cumulative voting can help ease the conflicts between board of directors and minority shareholders. Also, the tension between board and minority shareholders is affected by both corporate governance factors and a company's stock performance.

Research limitations/implications

In general, the research result indicates that cumulative voting is still an effective mechanism that can lower investors' costs on monitoring boards of directors.

Practical implications

Considering the huge amount of resources used in shareholder campaigns, the research result indicates that cumulative voting can be an efficient choice to alleviate the confrontation between dissenting shareholders and board of directors.

Social implications

With the change of minority shareholder structure, it is necessary to examine whether the corporate world needs to reconsider the adoption of cumulative voting.

Originality/value

The authors use a novel proxy, voting results of investor proposals, to measure the conflicts between board of directors and minority shareholders. This is also one of the few papers focusing on the monitoring cost side of the agency cost problem in corporate governance literature.

Details

Managerial Finance, vol. 37 no. 5
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 13 October 2017

Anne Lafarre

This chapter investigates which factors contribute to (small) shareholder attendance using a hand-collected panel data set with information about turnout rates, voting

Abstract

This chapter investigates which factors contribute to (small) shareholder attendance using a hand-collected panel data set with information about turnout rates, voting behaviour and ownership structures of companies that are listed in seven Member States. We document how ownership concentration positively affects total shareholder turnout, but has a negative effect on small shareholder turnout. Voting power also affects small shareholder turnout rates; the greater small shareholder voting power, the greater their eagerness to vote. In addition, total and small shareholder turnout is higher the more important the meeting agenda. And, small shareholders tend to free-ride on large institutional shareholders and corporate insiders, but the magnitude of the free-rider effect is larger for the latter category of blockholders. Our results provide some important insights for the debate on shareholder rights and the role of the AGM in corporate governance. The results show that, despite the criticism, the AGM still plays an important role in small shareholder monitoring. Some topics seem to clearly motivate small shareholders to attend, while others are less relevant. Policy makers can stimulate shareholder monitoring by focusing on the factors that are determined in this study, but it is important to consider possible endogeneity issues as well.

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Article
Publication date: 30 April 2020

Sonia Abdennadher and Walid Cheffi

E-corporate governance or the use of technologies and information systems (ISs) in corporate governance, is still a subject that is too seldom addressed in business…

Abstract

Purpose

E-corporate governance or the use of technologies and information systems (ISs) in corporate governance, is still a subject that is too seldom addressed in business research. This paper is at the intersection between two fields of research (corporate governance and the management of ISs), which are interdependent in ways that are still unexplored. The paper analyzes the implications of internet voting (IV) at shareholders’ annual meetings (SAM) for the corporate governance of listed companies in France, in particular for the relationship between executives and shareholders. Most of the studies that have dealt with IV at SAM have focused on techno-legal issues and were often conducted by business law researchers. The purpose of this paper is to investigate the implications of the new voting system through the prism of corporate governance.

Design/methodology/approach

The authors proceeded by triangulation of methods. This qualitative study is based on observations, interviews and documentary analysis. It assessed the IV implications for both the issuing companies and the shareholders.

Findings

The new voting system brings undeniable competitive advantage to the issuing company and facilitates shareholders’ activism, yet it has serious risks both for the corporations and for certain categories of the shareholder. Interestingly, the authors propose an original and field-grounded typology that distinguishes the risks and benefits associated with IV in relation to executives’ attitudes.

Social implications

The paper shows that the resolving of identified deficiencies with IV development could contribute to the alignment of companies’ interests with those of shareholders. Moreover, the study calls for policymakers to appoint an official body to regulate the practical implementation of the new system and to prevent its dissemination being held hostage to the executives’ willingness.

Originality/value

An original aspect of this research lies in the effective operationalization of the constructs of corporate governance effectiveness with a view to examining corporate governance as a set of technologically mediated practices. Moreover, this study emphasizes the key role of the construct of “executives’ willingness” in facilitating/impeding IV diffusion. This underlies their attempts to reverse the corporate governance relationship.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 4
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 13 April 2012

Jun Yang, Eric Zengxiang Wang and Yunbi An

The purpose of this paper is to study filer identities and voting outcomes of Canadian shareholder proposals and their impact on shareholders' wealth during the period…

Abstract

Purpose

The purpose of this paper is to study filer identities and voting outcomes of Canadian shareholder proposals and their impact on shareholders' wealth during the period from 2001 to 2008.

Design/methodology/approach

In total, 762 Canadian shareholder proposals and related information on targeted firms were collected from the Shareholder Association for Research and Education (SHARE) and the System for Electronic Document Analysis and Retrieval (SEDAR) databases. Statistical analyses are carried out on the features of shareholder proposals. Regression analyses are performed on voting outcomes, and an event study is conducted to test the impact of shareholder proposals on stock prices.

Findings

The authors' analyses show that proposals submitted by institutions or coordinated shareholder groups receive stronger support than those submitted by individuals and religious groups. Targeted firms are more willing and more likely to reach agreements with institutional investors, which in turn prompts activists to withdraw their proposals. The voting behavior of the Ontario Teachers' Pension Plan (OTPP) has a significant impact on voting outcomes. The targeted firms' stock prices respond substantially to news on proposals submitted by institutional and coordinated investors and proposals on social and environmental issues.

Originality/value

In addition to in‐depth analyses (issues, filers, voting outcomes, and impacts on stock price) of Canadian shareholder proposals, this paper explores the voting behaviour and impact of a large institutional shareholder that has been passive in filing shareholder proposals. Special attention is paid to Canadian features of shareholder activism, and differences between Canadian and US shareholder proposals are highlighted and discussed. The paper thus extends shareholder activism studies from focusing on open shareholder activists to investigating passive institutional shareholders.

Details

Managerial Finance, vol. 38 no. 5
Type: Research Article
ISSN: 0307-4358

Keywords

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Book part
Publication date: 13 October 2017

Anne Lafarre

In this chapter, we assess the ownership characteristics for the companies in our sample. For this, we do not only use ownership concentration measures such as the…

Abstract

In this chapter, we assess the ownership characteristics for the companies in our sample. For this, we do not only use ownership concentration measures such as the Herfindahl–Hirschman index but also voting power measures since ownership and voting power are not necessarily equivalent. We find that, in line with previous studies, ownership concentration and voting power of large shareholders is generally higher in continental European countries, which has important implications for corporate governance.

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Book part
Publication date: 13 October 2017

Anne Lafarre

Blockholders can behave opportunistically because small shareholder voting suffers from coordination problems. In this chapter, we investigate the features of small…

Abstract

Blockholders can behave opportunistically because small shareholder voting suffers from coordination problems. In this chapter, we investigate the features of small shareholder voting using a theoretical framework. Specifically, we investigate when defeating a blockholder’s resolution is optional for shareholders. Regulatory initiatives that facilitate communication between small shareholders or focus on institutional investors and corporate governance tools that alter or add the threshold in the voting game also contribute to solving the coordination problem. These corporate governance initiatives can increase the relevance of AGMs in Europe.

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Book part
Publication date: 13 October 2017

Anne Lafarre

Since we have seen in the previous chapter that only small part of the shareholder rights is harmonized at the European level, we explore the national regulations in this…

Abstract

Since we have seen in the previous chapter that only small part of the shareholder rights is harmonized at the European level, we explore the national regulations in this and the subsequent chapter. In this chapter, we focus in particular on procedural and information rights, including the organization of the meeting, forum rights and the disclosure of ownership information. We find that, inter alia, there are many differences in the national provisions regarding shareholder forum rights, despite article 9 of the Shareholder Rights Directive that provides shareholders with the right to ask questions. Also in the meeting’s organization there are large differences between countries, for example, regarding the use of EGMs.

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Book part
Publication date: 13 October 2017

Anne Lafarre

In this chapter, we assess shareholder voting behaviour in our sample of seven European Member States. We consider the AGM’s agenda, shareholder proposals, rejected voting

Abstract

In this chapter, we assess shareholder voting behaviour in our sample of seven European Member States. We consider the AGM’s agenda, shareholder proposals, rejected voting items and dissent rates. Our research shows, inter alia, that certain voting items receive higher dissent rates than others. These are, for instance, director elections and say-on-pay resolutions. Other voting items, such as the approval of the annual accounts, are merely a formality.

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Book part
Publication date: 3 May 2018

Charles P. Cullinan, Lois S. Mahoney and Pamela B. Roush

We examine the perceived influence of externally generated firm ratings of corporate social responsibility (CSR) on voting for shareholder-sponsored CSR proposals. Using…

Abstract

We examine the perceived influence of externally generated firm ratings of corporate social responsibility (CSR) on voting for shareholder-sponsored CSR proposals. Using stakeholder and legitimacy theories, we introduce two rationales that relate shareholder voting decisions to the firm’s CSR performance: the complementary perspective where investors rely on management’s branding or image of the firm for CSR performance, and the sufficiency perspective where shareholders consider legitimacy effects of firm CSR performance. Our examination of 473 CSR shareholder-sponsored proposals during the 2013 to 2015 proxy seasons reveals a negative relationship between support for shareholder-sponsored CSR proposals and CSR strengths, particularly for social and environmental CSR strengths. We also find a positive relationship between support for shareholder-sponsored CSR proposals and CSR concerns, particular in the area of environmental CSR concerns. These results partially support the sufficiency perspective that incorporates shareholder legitimacy concerns. When companies have poor CSR performance, shareholders may view further CSR initiatives as beneficial to the firm.

Details

Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-1-78754-973-9

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Article
Publication date: 20 March 2018

Dongming Kong

The purpose of this paper is to test a catering theory by examining impacts of minority shareholders’ pressures on earnings management (EM), and attempt to answer: what is…

Abstract

Purpose

The purpose of this paper is to test a catering theory by examining impacts of minority shareholders’ pressures on earnings management (EM), and attempt to answer: what is the role of minority shareholders participation (MSP) in corporate governance? and does MSP serve as an external monitor to managers, or does it put excessive pressure on them?

Design/methodology/approach

Using a novel online voting data set in China’s stock market, the author constructs the measure of MSP, and regress the EM on MSP. To address the endogeneity, the author introduces propensity score matching and difference-in-difference methods, instrumental variables, and Heckman estimation to show that the results are robust to different specifications and alternative measures.

Findings

The author documents that: MSP plays limited role in external monitoring; and firms facing high MSP levels tend to manage earnings more actively. In addition, information asymmetry, proposals’ importance, managerial incentives, and CEO financial expertise significantly affect firms’ catering behaviors.

Originality/value

This paper contributes to different strands of the literature. First, the finding significantly supports the catering hypothesis from a new perspective of EM. Second, the author contributes to a hotly debated issue in corporate governance: whether minority shareholders should be granted increased participation in corporate decisions? The results also provide timely empirical evidence for government regulators who are concerned about the costs and benefits of granting minority shareholders direct control over corporate decisions.

Details

China Finance Review International, vol. 9 no. 1
Type: Research Article
ISSN: 2044-1398

Keywords

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