سهامداران چندگانه و سرمایه گذاری شرکت ها: شواهد از چین Multiple large shareholders and corporate investment: Evidence from China

1. Introduction How well firms make investment decisions is a fundamental question in corporate finance. Extensive studies have documented that both information asymmetry and agency problems influence investment behavior (Stein, 2003). However, the empirical evidence on investment efficiency concerning agency problems has focused mainly on the manager-shareholder agency conflict (Berle and Means, 1932), overlooking the agency problem between controlling and minority shareholders (La Porta et al., 2000) and the potential governance role of blockholders, beyond the controlling shareholder. There are a few studies that have examined the governance role of multiple large shareholders (MLS hereafter). For example, Maury and Pajuste (2005) and Laeven and Levine (2008) explore the impact of MLS on firm value, and Attig et al. (2008) show the governance role of MLS in the cost of equity financing. Cho (1998) suggests that the relationship between ownership and firm value can be viewed as a two-stage process, the first stage is the effect of ownership structure on investment and the second stage is the effect of investment on firm value. Although the relationship between a firm’s investment decisions and corporate values has been well studied (e.g., McConnell and Muscarella, 1985; Chan et al., 1990; Blose and Shieh, 1997; Titman et al., 2004), prior study on the role of MLS on a firm’s investments has been limited. Our study fills this gap by focusing on the first stage and examining whether the existence of MLS – as opposed to a single large shareholder – benefits or harms minority shareholders through a firm’s investment decisions. Ownership by MLS is common in the corporate landscape (La Porta et al., 1999; Barca and Becht, 2001). Laeven and Levine (2008) examine 1,657 sample firms from 13 Western European countries and find that 34% of the firms have two or more large shareholders with at least 10% voting rights. Edmans and Manso (2011) find that 70% of U.S. firms have multiple blockholders with 5% or more of a firm’s equity. Not surprisingly, theorists have offered competing explanations for the effects of MLS. In one view, MLS monitor not only managers but also each other and, as a result, the firm implements better corporate policies (Shleifer and Vishny, 1986, 1997; Pagano and Roell, 1998). In the other view, MLS form controlling coalitions and collude to expropriate from minority shareholders (Pagano and Roell, 1998; Bennedsen and Wolfenzon, 2000). However, empirical evidence on the governance role of multiple blockholders in corporate decisions has been limited. Faccio et al. (2001) find that MLS tend to increase dividend rates and curb expropriation in Europe while decrease dividends and exacerbate expropriation in Asia.