Proceedings of the New York State Economics Association


Cumulative Voting and the Tension between Board and Minority Shareholders

Aiwu Zhao and Alex Brehm

vol. 2, October 2009, p. 103-111


The separation of management and ownership has created various agency problems and long-lasting conflicts between the board and minority shareholders. Our empirical study looks into whether cumulative voting can help ease the tensions between these two groups of investors. We use shareholder proposals as an indication of the nature and amount of tensions between the board and minority shareholders. Our research shows that cumulative voting can help ease the tension between the board of directors and minority shareholders and reduce investors' monitoring costs. In some cases, however, the impact of cumulative voting can be constrained by other corporate governance mechanisms.


suggested citation:

Aiwu Zhao and Alex Brehm. "Cumulative Voting and the Tension between Board and Minority Shareholders." Proceedings of the New York State Economics Association. vol. 2, October 2009, p. 103-111

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