Do Majority-of-Minority Shareholder Voting Rights Reduce Expropriation? Evidence from Related Party Transactions

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19 Scopus citations


In the presence of business groups, the expropriation through related party transactions (RPTs) is common and costly to minority shareholders. Using the setting of India's RPT voting rule, I find that a majority-of-minority shareholder voting mechanism helps mitigate expropriation. Minority shareholders actively raise their voice against RPT resolutions. A difference-in-differences analysis reveals that shareholder voting has a significant deterrence effect on RPT volume. I also find that stock markets react positively to the voting rule's passage, and that the rule makes Indian firms more attractive to foreign institutional investors.

Original languageEnglish (US)
Pages (from-to)1385-1423
Number of pages39
JournalJournal of Accounting Research
Issue number4
StatePublished - Apr 8 2021

Bibliographical note

Funding Information:
Accepted by Luzi Hail. I am grateful for the support of my dissertation committee, Fabrizio Ferri (cochair), Shiva Rajgopal (cochair), Tim Baldenius, Trevor Harris, and Wei Jiang. I greatly benefited from the comments of the associate editor, the referee, Bernard Black, Hans Christensen, Jonathan Glover, Urooj Khan, Robert Stoumbos, and workshop participants at Columbia University, University of Colorado‐Boulder, University of Illinois‐Chicago, University of Minnesota, University of Texas‐Austin, and the Ohio State University. All errors are my own. I am thankful for financial support from the W. Edwards Deming Center and the Jerome A. Chazen Institute. An online appendix to this paper can be downloaded at‐of‐accounting‐research/online‐supplements .

Publisher Copyright:
© 2021 The Chookaszian Accounting Research Center at the University of Chicago Booth School of Business


  • corporate governance
  • related party transactions
  • shareholder voting


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