Minority shareholder influence and labor investment efficiency: Evidence from China’s online voting reform

This study investigates the impact of enhanced minority shareholder influence on labor investment efficiency (LIE). Leveraging China’s online voting reform as a natural experiment, our analysis reveals that firms experiencing greater minority shareholder influence tend to exhibit lower LIE relative to control firms. We attribute this decline to increased pressure for short-term performance and potential managerial short-sightedness. Our research further demonstrates that this relative decrease in LIE is primarily driven by the actions of individual investors. The effect is more pronounced in firms characterized by weaker CEO power and greater financial constraints, which heighten their vulnerability to the influence of minority shareholders. Our findings are robust across various measures and address potential endogeneity concerns. Overall, this study highlights the intricate implications of empowering minority shareholders.