The determinants and effects of voluntary adoption of a cumulative voting system: Evidence from China

Rongli Yuan, Chao Liu, Jason Zezhong Xiao and Jian Sun

Pacific-Basin Finance Journal, 2018, vol. 51, issue C, 251-266

Abstract: Using a unique sample of China’s listed firms, we find that firms with strong corporate governance are more likely to adopt the cumulative voting system (CVS) and CVS adoption improves firm performance. Further analyses show that the positive relationship between CVS adoption and firm performance is more significant for firms with less mutual funds’ ownership, in a weak firm information environment, and whose managers have more power. Finally, we find three channels – professionalism of board directors, controlling shareholders’ expropriation, and managerial entrenchment– through which CVS adoption affects firm performance. This study enriches the literature on corporate governance in general and the literature on the principal-principal problems in particular. Our findings also have important policy implications for minority shareholder protection.

Keywords: Cumulative voting system; Principal-principal problems; Expropriation; Firm performance; Managerial entrenchment (search for similar items in EconPapers)
JEL-codes: G23 G32 G34 G38 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X17303621
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:51:y:2018:i:c:p:251-266

DOI: 10.1016/j.pacfin.2018.07.004

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().