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Minority shareholders' control rights and the quality of corporate decisions in weak investor protection countries: a natural experiment from China

Chen, Zhihong, Ke, Bin and Yang, Zhifeng 2013, Minority shareholders' control rights and the quality of corporate decisions in weak investor protection countries: a natural experiment from China, Accounting review, vol. 88, no. 4, pp. 1211-1238, doi: 10.2308/accr-50424.

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Title Minority shareholders' control rights and the quality of corporate decisions in weak investor protection countries: a natural experiment from China
Author(s) Chen, Zhihong
Ke, Bin
Yang, Zhifeng
Journal name Accounting review
Volume number 88
Issue number 4
Start page 1211
End page 1238
Total pages 28
Publisher American Accounting Association
Place of publication Sarasota, Fla.
Publication date 2013-07
ISSN 0001-4826
Summary Using a 2004 Chinese securities regulation that requires equity offering proposals to obtain the separate approval of voting minority shareholders, we examine whether giving minority shareholders increased control over corporate decisions helps to reduce value-decreasing corporate decisions for firms domiciled in weak investor protection countries. We find that the regulation deters management from submitting value-decreasing equity offering proposals in firms with higher mutual fund ownership. There is also weak evidence that minority shareholders are more likely to veto valuedecreasing equity offering proposals in firms with higher mutual fund ownership in the post-regulation period. Overall, our evidence suggests that in weak investor protection countries, the effect of granting minority shareholders increased control over corporate decisions on the quality of corporate decisions depends on the composition of minority shareholders.
Language eng
DOI 10.2308/accr-50424
Field of Research 150103 Financial Accounting
1501 Accounting, Auditing And Accountability
Socio Economic Objective 910499 Management and Productivity not elsewhere classified
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2013, American Accounting Association
Persistent URL http://hdl.handle.net/10536/DRO/DU:30090888

Document type: Journal Article
Collection: Department of Accounting
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