Engineering

Law and economics

Stock (firearms)

Expropriation

Majority rule

Accounting

Economics

Market economy

Disapproval voting

Business

Corporate governance

Mechanical engineering

Politics

Political science

Monetary economics

Finance

Voting trust

Shareholder

Voting

Journal of Accounting Research

ABSTRACT 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.

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