Shareholder Voting and Corporate Sustainability in China: An Empirical Study

Abstract

Despite the growing literature on China’s proliferating corporate social responsibility initiatives, little is known empirically about how Chinese shareholders react to these initiatives in their invested firms. Drawing upon a unique, hand-collected dataset containing the votes cast at shareholders’ meetings in Chinese A-share listed firms, this research reveals two divergent patterns. Some shareholders support (or oppose) such initiatives as often as they do proposals most susceptible to conflicts of interest (e.g. a firm transacting with its controlling shareholder). Others vote more strategically, rarely opposing such proposals as rigorously as they oppose proposals with a perceived negative impact on their immediate financial interests. Their varied approaches seem to be correlated with certain firm characteristics such as who controls the firm (i.e. state or private actors) and how strong the degree of control is.

Keywords: social responsibility, shareholder control, state actors, listed firms