Does the balance of power among block shareholders have impact on top management turnover? An empirical study of listed firms in China

摘要

Purpose-The purpose of this paper is to examine whether the shareholding of the largest shareholder and other large shareholders could exert a good stimulating effect within a firm's corporate governance structure and what impact the balance of power among large shareholders could have on top management turnover.Design/methodology/approach-This paper has investigated 787 firms publicly listed in the Shanghai Stock Exchange and checked the relation between power balance of firms' block shareholders and their top management turnover.Findings-The paper's empirical results show that there is a U-shaped relationship between the proportions of shareholding of a firm's largest shareholder and its top management turnover,that is,the controlling shareholder could impose either negative or positive effect for different types of equity ownership.We also find that the proportion of shares held by other block shareholders is significantly and positively related to the turnover of management and the monitoring effect of other large shareholders is strong.Furthermore,duality of chairman and CEO shows a significant negative effect on firms's top management turnover.Originality/value-The paper usefully shows that under the institutional background of relatively weak legal protection for medium and small investors in China,centralized shareholding by large shareholders in listed firms,or the so-called mechanism of power balance among block shareholders,has the ability to effectively supervise and restrain the corporate governance of a firm,replace ineffective managers and thus improve its whole management performance.