Abstract
Using proposal-level data in China, we document that online voting significantly increases minority shareholders’ participation in voting, and online voting is related to more dissenting votes. The association between online voting and minority shareholders’ participation and dissent is stronger in underperforming firms, indicating that minority shareholders tend to participate and dissent to express dissatisfaction. The association is stronger for shareholders with stronger voting power. Finally, we find that when minority shareholders’ dissent fails to veto a proposal, dissenting minority shareholders are less likely to participate and vote again the following year. Our results suggest that mechanisms designed to facilitate minority shareholder voting lead to greater and more informed participation in the corporate governance process.
Business Perspectives and Research, Ahead of Print.
The role of shadow banks, otherwise known as nonbanking finance companies (NBFCs), in any financial system is well recognized. Since their failure has the potential spillover effect on other institutions creating vulnerability in the entire financial system, identifying key areas that require improvement will enable the firm to work at institutional level to prevent the same. Also this exercise provides crucial input to the regulator to initiate appropriate and timely policy interventions. In this article, the performance is explored by considering the relevant parameters of 100 systemically important nondeposit-taking NBFCs in India by using the CAMELS framework. As very few NBFCs are listed in the stock market, a comparative analysis is made to identify distinct characteristics of listed and nonlisted firms. From the analysis, antecedent profitability and management competencies emerged as main performance drivers across the firms. Further, the result shows that listed firms engaged in income diversification and disbursing credit by relying on internal sources able to reduce the risk and enhance their performance. But, in the case of nonlisted firms generating revenue only through their core financing activities is key to their financial health. At the firm level, emphasis on improving the competencies through capacity building that will help improve the quality of assets and revenue generation is suggested. Simultaneously, the regulator also needs to keep a strong vigil on the activities of nonlisted firms.
Abstract
Through using 17,995 firm-year observations of all the Chinese A-share listed firms from 2008 to 2016 as a sample, we document that firms with vertical interlock have a lower likelihood of committing corporate fraud. We further test the underlying mechanisms, and we find that the effect of vertical interlock on the occurrence of corporate fraud is more pronounced when firms operate in a region with poor legal protection; with the legal environment being enhanced in China, the effect of vertical interlock has become less significant; and the effect of vertical interlock is also more pronounced when firms exhibit poor information environment at the firm level. Our results in this paper imply that the role of large shareholders and legal protection are substitutes in an emerging economy, and even with rapid economic and legal development in China, large shareholders keep playing a positive role in controlling fraudulent behaviours in Chinese listed firms.
