The power of minority shareholders: evidence from voting on the related party transaction proposals in China

Purpose The purpose of this paper is to evaluate the impact of minority shareholders’ attendance at shareholders meetings on related party transaction (RPT) proposals. Design/methodology/approach This paper empirically examines the impact of minority shareholders’ attendance in shareholders’ meetings on the voting results of RPT proposals based on the hand-collected voting data of Chinese listed companies. Findings The empirical result shows a significant positive relationship between the attendance of minority shareholders and the nonagreeable vote rate of RPT proposals. Moreover, this positive relationship is strengthened when the corporate governance is poor, the negative media coverage is high, and the on-site attendance of minority shareholders is high. Conversely, good corporate governance and high positive media coverage can weaken this positive correlation. The additional analysis reveals that the number of RPTs and better market performance in the future can be significantly reduced when minority shareholders express their nonagreeable voice actively. Originality/value This paper analytically and empirically examines the impact of minority shareholders’ attendance in shareholders’ meetings on the voting results of RPT proposals based on the hand-collected voting data of Chinese listed companies. It provides direct and convincing evidence for the impact of minority shareholders’ attendance and exercise of voting rights in shareholders’ meetings on the outcome of RPT proposals. It complements the literature on the governance effects of minority shareholders’ attendance in shareholders’ meetings to exercise their voting rights in emerging capital markets. This study has practical value by guiding minority investors to participate actively in corporate governance.