 Minority shareholder protection, corporate governance, and investment efficiencyFumian Huang, Liming Ge and Sirui Wu Finance Research Letters, 2023, vol. 58, issue PC Abstract: In 2016, the China Securities Investor Service Center (CSISC) held 100 shares of listed firms and exercised its rights as a minority shareholder in pilot regions. Using the hand-collected exercise data and a propensity score matching and difference-in-difference (PSM-DID) design, this study examines whether and how enhanced minority shareholder protection affects investment efficiency and explores the relationship among external governance mechanisms. We find that the exercise of rights by CSISC alleviates corporate underinvestment, especially for non-state-owned enterprises and firms with high levels of pre-existing tunneling activities and cash holdings. Furthermore, we document that the effect is more pronounced for firms audited by non-Big 4 and covered by fewer analysts, suggesting a substitutional relationship among external governance mechanisms. Collectively, our paper complements the studies concerning shareholder protection and renders practical references for regulators and policy-makers. Minority shareholders should not only be well-informed but also actively encouraged to enhance their engagement in corporate governance. Keywords: Minority shareholders; Underinvestment; Corporate governance; Regulators (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323008784 DOI: 10.1016/j.frl.2023.104506 Access Statistics for this article Finance Research Letters is currently edited by R. Gençay More articles in Finance Research Letters from Elsevier |
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