Shareholder Voting in China: The Role of Large Shareholders and Institutional Investors

Manuscript Type. Empirical. Research Question/Issue. Shareholders of nearly every company are given the right to vote, yet relatively little is known about the determinants of their voting behavior. Unique data in China render the votes of large shareholders observable, providing a rare opportunity to study the determinants of shareholder voting. Research Findings/Insights. We find that (a) large shareholders are significantly less likely to vote against reform proposals than small shareholders and (b) institutional investors—especially mutual funds (the largest institutional investors in China)—are significantly less likely to vote against proposals than individual investors. Theoretical/Academic Implications. We provide strong evidence for insider intervention in the voting process. Our study also adds to the understanding of voting behavior of large shareholders and institutional investors along with their governance roles in countries with weak legal protection for investors. Practitioner/Policy Implications. To improve the governance role of shareholder voting in countries with weak investor protection, it is necessary to strengthen the level of disclosure and supervision of shareholder voting decisions.