General Shareholders Research Articles

최신 ｢중국 회사법｣상 회사 소송제도에 관한 개정 내용 및 평가

Since the establishment of the Company Law in 1993, China's Company Law has revised five revisions in 1999, 2004, 2006, 2013, and 2018, but the large-scale revision was in 2006 and 2023. The 2023 revised Chinese company law is a complete revision, including the company capital system and governance structure, but the most noticeable change among them is the active attitude toward the company litigation system. The newly revised company law was more faithful to its role in mediating commercial disputes. In this paper, we looked at the shareholders' right to know, defects in resolutions at the general shareholders' meeting, and amendments to the lower limit of the representative litigation system.Because of the revision of China's company law will be a significant impact on commercial transactions in China, but also on Korean enterprises in China and transactions between South Korea and China, the writing of this article is particularly meaningful.

From apathy to activism: Shareholder dissent on director's pay proposals and board effectiveness

Using a hand-collected dataset of shareholder voting on 10,805 director compensation proposals at general shareholder meetings of Chinese listed firms from 2010 to 2019, we provide novel empirical evidence on board reactions to shareholder dissent. We find that boards of directors facing shareholder dissent significantly improve their monitoring and advising effectiveness. Specifically, they reduce the likelihood of financial restatements, improve CEO performance-turnover sensitivity, and improve corporate investment efficiency. Our findings are robust to propensity score matching, instrumental variable estimation and the exogenous shock of mandatory online voting. Moreover, independent directors facing dissent are more likely to vote against board proposals and to reduce their absences from board meetings. The mechanism analysis shows that shareholder dissent operates through the reputation concern and market signal channels. The effect of dissent is more prominent for non-SOEs, for firms with more high-profile directors, and for firms with less powerful CEOs. Besides, the improved board effectiveness induced by shareholder dissent leads to better firm performance. Overall, our findings highlight the role of shareholder voting in emerging markets with concentrated ownership and weak investor protection.

Neue Gesellschaftsform für Startups in Bulgarien – die Gesellschaft mit wechselndem Kapital

As of 1 August 2023, Bulgarian law provides for a new legal form to organise legal entities: the company with variable capital. This legal form is intended to allow modern companies in the IT sector to enter the market without requiring large amounts of capital or administrative resources. A major advantage of the new company form for founders is that shareholds have wide discretion in designing the articles of association. In particular, different classes of shares can be created, such as shares with disproportionate voting rights or with a right to a disproportionate share of profits. The new regulation also provides for simplifications in corporate governance, and the possibility of digital general shareholder meetings. The commercial register is scheduled to be technically capable of registering companies with variable capital from mid-2024.

Legal Dynamics of Limited Liability Companies: Unveiling the Power of Commissioners and Shareholders to Take Legal Action Against Directors' Negligence

The Limited Liability Company (LLC) is characterized by its distinct juridical entity, effectively segregating its management group from shareholders. Operating as a business entity, the primary goal of an LLC is profit generation. Functioning as a corporate legal entity with legal personality, an LLC comprises three key organizational components: the General Shareholders’ Meeting, Directors, and Commissioners. Directors, or the Board of Directors (BOD), bear the responsibility of managing and representing the LLC both within and outside the legal realm. The position of BOD is mandated to be occupied by a natural person, or 'naturlijk person,' either as a single individual (Director) or collectively by two or more individuals (Board of Directors). Despite a stringent selection process for board positions, the inherent nature of directors as natural persons introduces the possibility of intentional or negligent errors in management, potentially leading to financial losses. In the face of such negligence, the pertinent question arises: can a commissioner (Board of Commissioners) and/or shareholders initiate legal action against a director or BOD, whose legal standing is as the company’s representative? To address this query, a comprehensive library research initiative is undertaken, focusing on the analysis of Article 97 and Article 98 of the Limited Liability Company’s legal statutes. This examination aims to elucidate the viable courses of action that can be pursued against the company in the event of directorial negligence. The research findings reveal that specific commissioners and/or shareholders, in the absence of a director's power of attorney, are granted the authority by the LLC’s legal statutes to initiate legal proceedings against the director or board of directors in a court of law.

Exploring and Analyzing ESG Activity Evaluation Factors of Sports Brands using Delphi and AHP Techniques

PURPOSE This study aimed to identify and establish ESG activity assessment factors tailored for sports brands, offering a foundational framework for fostering sustainability within the sports industry.METHODS A Delphi survey was conducted between December 1, 2022, and January 31, 2023, involving university professors, sports brand executives, ESG researchers, sports marketing majors , a nd sports brand influencers. Data were analyzed using SPSS WIN 24.0 and MS Excel, encompassing research subject classification, consistency verification, and empirical analysis.RESULTS The assessment of ESG activity evaluation factors of sports brands revealed that governance, social, and environmental dimensions ranked in descending order of relative importance. Among specific evaluation criteria, the adoption of employee ethics regulations was deemed paramount in the governance evaluation area, while support for stakeholder welfare and social well-being took precedence in the social evaluation category. In the environmental sector, the production and delivery of eco-friendly, durable products held the highest significance. Further analysis, considering the weighted priorities of all evaluation factors, emphasized the importance of factors, such as the adoption of employee ethics regulations, support for stakeholder welfare, social well-being, and the production and delivery of eco-friendly, durable products. Conversely, disclosure of company information and issues, support for the underprivileged, and general shareholders' meeting or agenda for the protection of shareholders' rights and interests ranked lower.CONCLUSIONS In summary, this study validates the role of governance (G) aspects within ESG activities for sports brands, alongside environmental and social dimensions. It highlights the importance of a balanced ESG framework, particularly in an era marked by heightened social responsibility awareness among consumers. Prioritizing governance in marketing strategies not only distinguishes sports brands but also necessitates impactful promotion and advertising efforts.

독일의 코로나19 팬데믹 관계법상의 버추얼 주주총회에 관한 연구

With the Act on Measures in Corporate, Cooperative, Association, Foundation, and Home Ownership Law to Combat the Effects of the COVID-19 Pandemic, virtual shareholders' meetings were temporarily held in Germany. Overall, shareholders' participation in general meetings increased. However, shareholders' right to speak and ask questions was not guaranteed, raising the issue of infringement of shareholders' rights and the risk of resolution cancellation at general shareholders' meetings. Besides, there has been skepticism about continuing to hold virtual shareholders' meetings after the end of the COVID-19 pandemic. In Korea, due to the COVID-19 pandemic, the idea of virtual shareholders' meetings, instead of on-site meetings that require physical attendance, gained more support. However, as in the German case, if shareholders' right to speak and ask questions is not guaranteed, virtual shareholders' meetings can create a social issue. Successful settling of the virtual general shareholders' meeting system requires technical and institutional support. If Korea reflects on the issues raised in the German experience of holding virtual general shareholders’ meetings to improve the institutional system, it will maximize the advantages of virtual meetings while reducing trial and error. First, virtual shareholders' meetings need promotion as an arena of shareholder discussion that is shareholder friendly. Moreover, companies must establish an adequate online system to run virtual shareholders’ meetings seamlessly. If shareholders are denied chances to ask questions at the virtual meetings, it will restrict their informational rights. More questions from shareholders may naturally interfere with the virtual meetings, and some may intentionally abuse this. Notably, shareholders who accessed the meeting online may ask questions more frequently than at on-site meetings. Nevertheless, it is not desirable to block questions from shareholders. A moderator should manage the number of questions (to fit in the given time) and guarantee shareholders’ right to ask questions.

미국에서의 주식의 법적 성질

In the U.S. corporate law, the legal nature of shares is limited, and the legal nature of shares is often the concept of property in precedent and theory. In addition, the U.S. corporate law still maintains a legal system affiliated with the common law, and many of the legal concepts for stocks are inherited by the British corporate law. But what they mean is not all that clear.BR Therefore, this article attempts to approach the central concept of stocks discussed in the United States through the analysis of precedents. Specifically, the concept of property, which is the premise of discussing the legal nature of stocks, is outlined, and then the discussion on the concept of intangible movable property, which is a representative concept of the legal nature of stocks, is summarized. As a clue to the review of specific legal problems arising from the legal nature of stocks, it is pointed out that the possibility of transfer may exist at the basis of the legal nature of modern stocks along with inherent rights, and that actual corporate behavior presents a modern task to urge a review of the existing stock essence.BR Stocks were initially recognized as representing ownership of material fluids, which are objects of investment made by shareholders through the company or investment made by the company itself. According to the legal concept, the understanding of the nature of stocks was converted from ‘property’ to intangible or human property and into intangible real estate. The substance was the abstraction and generalization of the concept of ownership. At the same time, it was the acquisition of the possibility of transfer due to a phased departure from the restrictions on the possibility of transfer in real estate. More essentially, it was a conscious and unconscious re-confirmation of the inherent rights of shareholders, which the concept of ‘property’ originally possessed. What made it possible is that the concept of ‘property’ itself achieved abstraction and generalization. Although capitalist economic relations were completed by this change of concept, ‘property’ below it means ‘control over gains by expectations that can be traded in the future’, and the freedom acquired by stocks is tantamount to freedom of transaction in the market. The abstraction of the stock concept supported this. In other words, it can be seen that the possibility of transfer exists at the root of the legal nature of modern stocks along with inherent rights. In response to the demand for transferability, the abstraction and bondization of stocks proceeded. It is thought that the discussion on the acceptance of class stocks or the attendance of shareholders at the general shareholders

Doing the Right Thing? The Voting Power Effect and Institutional Shareholder Voting.

Through a combination of a controlled experiment and a survey, we examine the effect of voting power on shareholders’ voting behavior at general meetings. To avoid a selection bias, common in archival voting data, we exogenously manipulate shareholders’ power to affect the outcome. Our findings suggest that, when it comes to corporate decisions involving conflicts of interest, voting power nudges shareholders to oppose management and to choose the “right” alternative, that is, vote against a proposal which prima facie does not serve the company’s best interest. This effect obtained even when the dissenting vote contravened the choices of all other voters. Furthermore, the drive “to do the right thing” was established as significant, above and beyond the size of the economic stake. We also demonstrate that strategic voting among institutional investors is contingent on voting power: when in a position to affect the outcome of a vote, institutional investors tend to eschew strategic considerations and display fewer consistent patterns in their voting, compared to situations in which their ability to make a difference is limited. In anticipation of a “bad” proposal to be put to vote at the general shareholder meeting, institutional investors prefer to negotiate terms with management beforehand, and vote against it only after such negotiations fail. Our results shed new light on the “behind the scenes” processes in shareholder voting and underscore the importance of institutional investor agency to corporate governance, accountability, and minority shareholder representation.Supplementary InformationThe online version contains supplementary material available at 10.1007/s10551-022-05108-y.

코스닥 시장의 대주주와 일반주주 간 기울어진 운동장에 관한 실증 사례연구: 최대주주 변경 후 상장폐지 사례 중심으로

Purpose A stock transfer contract, including a change in the largest shareholder, proceeded with a block deal and was delisted less than three months later, causing major damage to ordinary shareholders on the KOSDAQ market. However, both major shareholders of the contract realized great economic benefits. We would like to confirm that uneven of KOSDAQ regulations is creating unfair results between major shareholders and general shareholders. Methods Robert K. Yin''s empirical case study methodology is applied to analyze the unbalanced aspects of the system through objective and various data and fact-checking. Results As a result of the case analysis, major shareholders, who are the subjects of the stock transfer contract, realized profits by using the imbalance between the system and regulations-mandatory - lock up, disclosure system, and block deal, while general shareholders suffered great economic and mental damage. Conclusion It could be said that there is an unbalanced system centered on major shareholders in the cause of the occurrence of the case. If the regulations don’t improve, this case can be repeated, and general shareholders suffer the same damage.

Does the Female Presence in Corporate Governance Influence the Level of Indebtedness in Agri-Food Family Firms?

Family firms form the backbone of most of the world’s economies. While the issues surrounding family firms are diverse, gender diversity and its impact on the strategic and financial decisions of such firms is a topic that has generated significant debate in recent years. In particular, one of the most crucial unresolved questions is whether or not increasing the female presence in the family firms’ corporate governance bodies would be beneficial for improving their internal functioning. To shed new light on these issues, our study aims to examine the influence of gender diversity on the level of indebtedness of Spanish agri-food family firms. Specifically, and applying a risk-aversion perspective, the research goal is to analyse whether the female presence in corporate governance structures (board of directors, top management team and general shareholders’ meeting) influences the level of firm indebtedness. To test the suggested relationships, ordinary least square regression models were applied to a sample of 137 firms. The final sample was obtained by combining quantitative data from the SABI database and qualitative data from a survey conducted by the Spanish Institute of Family Firms and the Spanish Network of Family Business Chairs. This study reveals an inverse relationship of female presence in the board of directors, in the top management team, and in the general shareholders’ meeting on the level of indebtedness of Spanish agri-food family firms. In other words, the findings show that female presence in corporate governance structures contributes to enhanced business management behaviour and, thus, to a better utilisation of firms’ financing strategies. The obtained results have very important practical and social implications, insofar as they contribute to the building of a more inclusive and sustainable business world, aimed at reducing gender inequality at top positions in firms.

Advisors in Corporate Governance of Family Firms

This study examines how specialized advisors impact the implementation of good governance practices at the firm and family level. We applied a qualitative case study approach using four cases in four different industries with diverse levels of management sophistication. This revealed that firms’ governance structure outputs, such as a board of directors and general shareholder meetings, and the family governance outputs, for instance, family protocols and family councils, substantially improve with an advisors’ intervention. We highlighted the important but seldom studied in the academic literature of advisors’ role in designing a better governance structure at the business and family level and its implementation. We also stressed the importance of building confidence, transparency, and trust between the advisor and the family.

주주총회의 이사·감사 선임결의의 성질과 효력 - 대법원 2017. 3. 23. 선고 2016다251215 판결을 중심으로 -

종래 대법원 판결에 따르면 이사·감사의 지위가 인정되려면 주주총회의 선임 결의 이후에 대표이사의 청약과 피선임자의 승낙에 의한 위임계약의 체결이 필요하다고 보았다. 그런데 최근 대법원 2017. 3. 23. 선고 2016다251215 판결은 주주총회의 선임 결의만으로 이사·감사의 지위 취득이 인정된다고 판시하였다. 이사·감사는 주주총회의 선임결의에 의하여 취득된다는 결론은 이사의 선임에 대표이사의 관여를 배제하여 주주총회의 이사 선임에 관한 보장한다는 측면에서 그 결론은 타당하다. 그리고 이사를 선임할 권한이 주주총회의 고유한 권한에 속하고, 대표권의 범위에 속하지 않는다는 점을 밝힌 점은 기관 간 권한의 범위를 분명히하였다는 점에서 의미가 있다. 그러나 동 판결이 근거로 제시한 주주총회의 권한 보장의 필요성은 이사와 회사의 관계가 위임관계라는 점에서 이사의 지위 취득에 있어서 위임계약의 체결이 필요하지 않다는 점에 대한 충분한 설명이 될 수 없다는 비판이 제기되고 있다. 비판적 입장에서는 주주총회가 의사결정기관에 불과하고 업무집행기관의 역할을 부여받은 것이 아니라는 점에서 위임계약의 체결이 필요하다고 하고, 이사의 선임 권한이 주주총회의 전속적 권한이라는 점과 이사의 선임이 대표이사의 권한인 회사의 영업에 관한 재판상 또는 재판 외의 모든 행위를 할권한에 속하지 아니한다는 점만으로 위임계약의 체결 없이 주주총회의 결의만으로 주주의 지위를 인정할 수 있는 근거로 삼기에 충분하지 못하다고 지적한다. 이사의 지위 취득에 있어서 위임계약의 체결이 필요한지 여부는 법률상 선임행위의 성질과 효력을 살피고 선임과 위임의 의미를 살펴봄으로써 그 결론을 도출하여야 할 필요성이 있다. 법률은 선임과 위임을 구분하여 사용하고 있으므로 이를 다르게 보는 것이 타당하고, 선임에 의하여 일정한 지위를 취득한 경우 위임에 관한 규정을 준용하도록 한 것은 위임계약이 체결될 것을 전제하지 않은 것으로 보아야 한다. 위임계약이 체결되면 위임에 관한 규정이 당연히 적용되기 때문이다. 민법의 규정을보면 일방적으로 법률에 정한 일정한 지위를 부여하고자 하는 경우 선임에 관한 규정을 두고 있다. 이에 따르면 선임행위는 피선임자의 동의를 전제로 법률이 정한 일방적 지위를 부여하는 단독의 법률행위로 볼 수있다. 상법은 이사는 주주총회의 결의로 선임된다고 규정하고 있고, 위임에 관한 규정을 준용하고 있다. 그러므로 주주총회의 선임결의는 동의를 조건으로 이사·감사의 지위를 부여하는 단독의 행위로 보아야 한다. 따라서 주주총회의 선임결의가 있고, 선임된 자의 사전 또는 사후동의가 있으면 위임계약의 체결이 없더라도 이사의 지위를 취득한다고 보는 것이 타당하다.

주주총회의 이사·감사 선임결의의 성질과 효력 - 대법원 2017. 3. 23. 선고 2016다251215 판결을 중심으로 -

종래 대법원 판결에 따르면 이사·감사의 지위가 인정되려면 주주총회의 선임 결의 이후에 대표이사의 청약과 피선임자의 승낙에 의한 위임계약의 체결이 필요하다고 보았다. 그런데 최근 대법원 2017. 3. 23. 선고 2016다251215 판결은 주주총회의 선임 결의만으로 이사·감사의 지위 취득이 인정된다고 판시하였다. 이사·감사는 주주총회의 선임결의에 의하여 취득된다는 결론은 이사의 선임에 대표이사의 관여를 배제하여 주주총회의 이사 선임에 관한 보장한다는 측면에서 그 결론은 타당하다. 그리고 이사를 선임할 권한이 주주총회의 고유한 권한에 속하고, 대표권의 범위에 속하지 않는다는 점을 밝힌 점은 기관 간 권한의 범위를 분명히하였다는 점에서 의미가 있다. 그러나 동 판결이 근거로 제시한 주주총회의 권한 보장의 필요성은 이사와 회사의 관계가 위임관계라는 점에서 이사의 지위 취득에 있어서 위임계약의 체결이 필요하지 않다는 점에 대한 충분한 설명이 될 수 없다는 비판이 제기되고 있다. 비판적 입장에서는 주주총회가 의사결정기관에 불과하고 업무집행기관의 역할을 부여받은 것이 아니라는 점에서 위임계약의 체결이 필요하다고 하고, 이사의 선임 권한이 주주총회의 전속적 권한이라는 점과 이사의 선임이 대표이사의 권한인 회사의 영업에 관한 재판상 또는 재판 외의 모든 행위를 할권한에 속하지 아니한다는 점만으로 위임계약의 체결 없이 주주총회의 결의만으로 주주의 지위를 인정할 수 있는 근거로 삼기에 충분하지 못하다고 지적한다. 이사의 지위 취득에 있어서 위임계약의 체결이 필요한지 여부는 법률상 선임행위의 성질과 효력을 살피고 선임과 위임의 의미를 살펴봄으로써 그 결론을 도출하여야 할 필요성이 있다. 법률은 선임과 위임을 구분하여 사용하고 있으므로 이를 다르게 보는 것이 타당하고, 선임에 의하여 일정한 지위를 취득한 경우 위임에 관한 규정을 준용하도록 한 것은 위임계약이 체결될 것을 전제하지 않은 것으로 보아야 한다. 위임계약이 체결되면 위임에 관한 규정이 당연히 적용되기 때문이다. 민법의 규정을보면 일방적으로 법률에 정한 일정한 지위를 부여하고자 하는 경우 선임에 관한 규정을 두고 있다. 이에 따르면 선임행위는 피선임자의 동의를 전제로 법률이 정한 일방적 지위를 부여하는 단독의 법률행위로 볼 수있다. 상법은 이사는 주주총회의 결의로 선임된다고 규정하고 있고, 위임에 관한 규정을 준용하고 있다. 그러므로 주주총회의 선임결의는 동의를 조건으로 이사·감사의 지위를 부여하는 단독의 행위로 보아야 한다. 따라서 주주총회의 선임결의가 있고, 선임된 자의 사전 또는 사후동의가 있으면 위임계약의 체결이 없더라도 이사의 지위를 취득한다고 보는 것이 타당하다.

주주의 회계장부열람청구권에 관한 쟁점사항 검토

In a stock company, the interests of various entities such as shareholders and creditors etc. are complexly linked, various disclosures of the company are very important to them. Because shareholders check the profitability and recovery of investments and whether or not to change directors based on the disclosures made by the company, and creditors also view the disclosures to determine the possibility of reimbursement and decide whether or not to collect bonds. Moreover, in the case of listed companies, disclosure is also required to maintain fairness in stock transactions. As such, the company’s disclosures and their contents are monitored by shareholders, creditors, and the market, and thus serve as a means of inducing the rational performance of directors. However, since it is difficult to fully disclose company information containing corporate secrets, the Commercial Act mandates disclosure only for certain information, and the scope of disclosure is different according to minority shareholders, general shareholders and creditors.<BR> A stock company shall prepare financial statements, its annexed statements, business reports, and audit reports, and keep a certified copy of it at the head office for 5 years from one week before the day of the general shareholders’ meeting for 3 years and disclose it, the listed companies, etc. subject to the Act on External Audit of Stock Companies etc. must also keep and disclose the audit report of an external auditor. Therefore, if a director neglects this duties, the shareholders who suffered damages can hold the directors liable for damages, and the listed companies are liable for damages due to insolvency disclosure. However, since these documents are prepared by the company for disclosure, there is a risk of fraud, so shareholders who are investors and managers need to obtain more detailed corporate information. However, since it is difficult to fully disclose the financial information of a company that contains corporate secrets, the Commercial Act requires only certain information to be disclosed. However, in order to protect shareholders’ interests, Shareholder’s Right to Inspect Books of Account is recognized. However, only the basic content is defined in a single article, and various issues related to it are resolved by theories and precedents.<BR> The issues related to Shareholder’s Right to Inspect Books of Account are very diverse. Of course, a large part of the solution has been resolved through previous studies and precedents, but new issues are still being raised, and a rational interpretation and legislative supplementation through comprehensive review are necessary. Therefore, in this paper, the following measures were suggested. That is, 1) In relation to stocks, the concept of ownership and the concept of holding are used interchangeably, which must be unified as the concept of ownership. 2) The retention requirement of 6 months or longer applied to listed companies is too long and should be shortened to a reasonable period. 3) Considering the recent trend of digitization, not only documents but also electronic documents should be recognized as a method of requesting access. 4) There is no standard for judging whether a request for reading is unfair or not, so it is resolved according to theory and precedent, but the Japanese Company Law provides examples of unfair claims. Therefore, first of all, it should be judged based on this, but legislatively supplemented in the future. 5) It should be legislatively clarified so that the company cannot reject a request for access to accounting books, etc. while the shareholder proceeds with other procedures such as exercising the stock purchase right or filing a representative lawsuit. 6) Even if the company initiates the rehabilitation procedure, it should be interpreted that the shareholders can request for inspection, and legislative supplements should also be provided.

Spanish Loyalty Shares: Effects on the General Shareholders´ Meeting, on Takeover Bids and on Significant Holdings

Spanish Loyalty Shares: Effects on the General Shareholders´ Meeting, on Takeover Bids and on Significant Holdings

Socially Responsible Newsvendor

We consider a socially responsible firm that is concerned with its profit as well as consumer surplus, following the preference of pro-social executives, consumer activists, activist shareholders, or a government shareholder. Specifically, we study the decisions faced by a newsvendor whose objective is modeled as a weighted average of the expected profit and consumer surplus, with the weight on consumer surplus referred to as the corporate social responsibility (CSR) level. Our model includes the pure profit-maximizing and non-profit firms as two extreme cases. We study the firm's optimal inventory decision in the base model and the optimal joint price and inventory decisions in an extension. Our results show that the socially conscious executives (resp., the government as a shareholder) would face less resistance from the firm's general shareholders (resp., the firm) when imposing a lower CSR level, yet with which it enjoys a more significant improvement in boosting consumer surplus at the cost of a marginal profit loss by the firm, in both relative and absolute terms. We also provide demand-distribution-free guarantees on the performance of enduring profit loss in exchange for consumer surplus achieved by a CSR level. Moreover, we show that the same level of demand variability has a less negative impact on the firm's objective when its CSR level is higher; under normal demand, with a little CSR, such a negative impact has a larger reduction for a product with a higher coefficient of variation or a lower critical ratio. Finally, one of our numerical studies using practical data demonstrates that for an influenza vaccine of Afluria Quadrivalent, a CSR level of 10\% enables the firm to improve consumer surplus by 17.8\% (of the maximum improvement) at the expense of a profit loss of only 1.2\% (of the maximum loss) for a typical demand's coefficient of variation level of $0.4$. Our results imply and quantify the managerial insight that a little CSR can go a long way, which holds robustly in a variety of forms and senses for the newsvendor setting.

Doing the Right Thing? The Voting Power Effect and Institutional Shareholder Voting

Employing an experimental and a survey approach, we examine the effect of voting power on voting behavior at shareholder meetings. To avoid the possible selection bias in archival voting data, we exogenously manipulate the shareholders’ power to affect the outcome. Our findings suggest that voting power nudges shareholders to oppose management and to choose the “right” alternative, that is, to vote against a proposal which ostensibly does not serve the company’s best interest. This effect emerged even when the dissenting vote stood in opposition to that of all their peers’ and even in opposition to self-interest. Furthermore, we find that strategic voting among institutional investors is contingent on voting power: When in a position to affect the outcome, institutional investors tend to take fewer strategic considerations into account and follow fewer consistent patterns in their voting, relative to situations in which their ability to affect the outcome is limited. When confronting the prospect of a “bad” proposal coming before the general shareholders meeting, institutional investors prefer to negotiate terms with management, and vote against it only after negotiations fail. Our results shed additional light on the ‘behind the scenes’ processes involved in shareholder voting and underscore the importance of institutional investor agency to corporate governance, accountability and minority shareholder representation.

Abuse of Shareholder Rights — A Solution for Japanese Companies Act and Comparative Law Analysis on Hypothetical Case/ 【Appendix】"Shareholders' Right to Propose" under the 2019 Amendment of Japanese Companies Act

This paper presents a solution for Japanese Companies Act and comparative law analysis on hypothetical case regarding “abuse of shareholder rights”. It is based on “Mathias Siems and David Cabrelli (eds), Comparative Company Law - A Case-Based Approach, 2nd edition (Oxford, Hart Publishing, 2018)” which I participated in writing as one of the co-authors. In that book, this case was prepared by German scholar, then lawyers from 12 countries (9 European countries, US, Japan and South Africa) responded to it based on their own law, and finally, based on these 12 case solutions the questioner wrote the case report. This paper added the results of joint research with lawyers and businessmen from various jurisdictions at Waseda University L.L.M. and Business School, based on hypothetical case. With the addition of Belgium, China, South Korea, Taiwan, Singapore and Brazil as new jurisdictions, consequently comparative law research covering 19 countries have conducted. In particular, research on corporate law in Asian countries has been strengthened. Also it was tried to explain and analyze the solutions of European countries from a practical point of view. (The author is solely responsible for this paper, but details of case studies in some jurisdictions and comparative law research with Japanese law will be posted separately at a later date.) Also, in the Appendix, I will explain the limitation of abusive exercise of shareholders’ rights to propose under the 2019 Amendment on the Companies Act in Japan. This Amendment limits the number of proposals that companies with boards of directors can request shareholders to be notified of the details before the general shareholders meeting to 10 in principle. There, consideration has been given so that necessary proposals can be fully proposed. In addition, the introduction of restrictions on the content of proposals and the purpose of exercising shareholders’ rights to propose was forgone. It can be said that restrictions have been placed only when there is a high need for measures against abusive exercise.

Ownership Structure and Earnings Management: Empirical Evidence from Listed Pharmaceuticals and Chemical Firms of Bangladesh

Objective – This study aims to examine the relationship between ownership structure (determined by institutional and foreign ownership) and earnings management in the context of Bangladeshi Pharmaceuticals and Chemical firms. Methodology/Technique – Out of 32 listed firms, this study examined 29 firms from the pharmaceuticals and chemical industry of Bangladesh from 2014 to 2018. Three firms are omitted as they got listed in 2018 and 2019 respectively. This study uses discretionary working capital accrual to measure earnings management that is the dependent variable. Ordinary least square regression analysis is conducted to assess the result of this study. Institutional and foreign ownership are independent variables. ROA, size, cash flow from operation, and leverage are control variables. Findings – It is found that institutional ownership is negatively related to earnings management and foreign ownership is positively related to earnings management but none of them are statistically significant indicating institutional and foreign ownership do not help in resolving or reducing the earnings management problems in the context of Bangladeshi pharmaceuticals and chemical firms. Novelty – Previous studies in Bangladesh deal only with the techniques of earnings management. To my knowledge, it is the first study that tries to assess the relationship of ownership structure defined by institutional and foreign shareholdings with earnings management in the context of Bangladeshi pharmaceuticals and chemical firms. These two ownership patterns are selected because they are supposed to increase the quality of financial information and also because in Bangladesh state and general shareholders are too dispersed to monitor the governance issues. The practical implications of this study is that investors should not consider institutional and foreign ownership percentage as a determining factor of good governance when considering investment decisions rather should look for other firm-specific factors as institutional and foreign shareholders are found to be inactive in increasing the quality of financial information in the context of Bangladesh. Policymakers should identify why institutional and foreign shareholders are not active and should revise the governance mechanisms accordingly. Type of Paper: Empirical

Ownership Structure and earnings management: Empirical evidence from listed pharmaceuticals and chemical firms of Bangladesh

Objective – This study aims to examine the relationship between ownership structure (determined by institutional and foreign ownership) and earnings management in the context of Bangladeshi Pharmaceuticals and Chemical firms. Methodology/Technique – Out of 32 listed firms, this study examined 29 firms from the pharmaceuticals and chemical industry of Bangladesh from 2014 to 2018. Three firms are omitted as they got listed in 2018 and 2019 respectively. This study uses discretionary working capital accrual to measure earnings management that is the dependent variable. Ordinary least square regression analysis is conducted to assess the result of this study. Institutional and foreign ownership are independent variables. ROA, size, cash flow from operation, and leverage are control variables. Findings – It is found that institutional ownership is negatively related to earnings management and foreign ownership is positively related to earnings management but none of them are statistically significant indicating institutional and foreign ownership do not help in resolving or reducing the earnings management problems in the context of Bangladeshi pharmaceuticals and chemical firms. Novelty – Previous studies in Bangladesh deal only with the techniques of earnings management. To my knowledge, it is the first study that tries to assess the relationship of ownership structure defined by institutional and foreign shareholdings with earnings management in the context of Bangladeshi pharmaceuticals and chemical firms. These two ownership patterns are selected because they are supposed to increase the quality of financial information and also because in Bangladesh state and general shareholders are too dispersed to monitor the governance issues. The practical implications of this study is that investors should not consider institutional and foreign ownership percentage as a determining factor of good governance when considering investment decisions rather should look for other firm-specific factors as institutional and foreign shareholders are found to be inactive in increasing the quality of financial information in the context of Bangladesh. Policymakers should identify why institutional and foreign shareholders are not active and should revise the governance mechanisms accordingly. Type of Paper: Empirical Keywords: Ownership structure; Institutional Shareholdings; Foreign Shareholdings; Earnings Management; Bangladesh. Reference to this paper should be made as follows: Hossain, D.A. 2020. Ownership Structure and earnings management: Empirical evidence from listed pharmaceuticals and chemical firms of Bangladesh, J. Fin. Bank. Review, 5 (2): 58 – 69 https://doi.org/10.35609/jfbr.2020.5.2(3) JEL Classification: G40; G41; G49.