Does the balance of power among block shareholders have impact on top management turnover?: An empirical study of listed firms in China
AbstractPurpose–The purpose of this paper is to examine whether the shareholding of the largest shareholder and other large shareholders could exert a good stimulating effect within a firm's corporate governance structure and what impact the balance of power among large shareholders could have on top management turnover. Design/methodology/approach–This paper has investigated 787 firms publicly listed in the Shanghai Stock Exchange and checked the relation between power balance of firms' block shareholders and their top management turnover. Findings–The paper's empirical results show that there is a U-shaped relationship between the proportions of shareholding of a firm's largest shareholder and its top management turnover, that is, the controlling shareholder could impose either negative or positive effect for different types of equity ownership. We also find that the proportion of shares held by other block shareholders is significantly and positively related to the turnover of management and the monitoring effect of other large shareholders is strong. Furthermore, duality of chairman and CEO shows a significant negative effect on firms's top management turnover. Originality/value–The paper usefully shows that under the institutional background of relatively weak legal protection for medium and small investors in China, centralized shareholding by large shareholders in listed firms, or the so-called mechanism of power balance among block shareholders, has the ability to effectively supervise and restrain the corporate governance of a firm, replace ineffective managers and thus improve its whole management performance
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Emerald Group Publishing in its journal China Finance Review International.
Volume (Year): 1 (2010)
Issue (Month): 1 (December)
Contact details of provider:
Web page: http://www.emeraldinsight.com
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Erik Lehmann & Juergen Weigand, 2000. "Does the Governed Corporation Perform Better? Governance Structures and Corporate Performance in Germany," CoFE Discussion Paper 00-05, Center of Finance and Econometrics, University of Konstanz.
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110.
- Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999.
"Corporate Ownership Around the World,"
Journal of Finance,
American Finance Association, vol. 54(2), pages 471-517, 04.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers 1840, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998. "Corporate Ownership Around the World," NBER Working Papers 6625, National Bureau of Economic Research, Inc.
- La Porta, Rafael & Lopez-de-Silanes, Florencio & Schleifer, Andrei & Vishny, Robert, 2001.
"Investor Protection and Corporate Governance,"
Working Paper Series
rwp01-017, Harvard University, John F. Kennedy School of Government.
- Shleifer, Andrei & Vishny, Robert W, 1986.
"Large Shareholders and Corporate Control,"
Journal of Political Economy,
University of Chicago Press, vol. 94(3), pages 461-88, June.
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351.
- María Gutiérrez & Josep A. Tribo, 2004. "Private benefits extraction in closely-held corporations: The case for multiple large shareholders," Business Economics Working Papers wb044315, Universidad Carlos III, Departamento de Economía de la Empresa.
- Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
- Warner, Jerold B. & Watts, Ross L. & Wruck, Karen H., 1988. "Stock prices and top management changes," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 461-492, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Louise Lister).
If references are entirely missing, you can add them using this form.