Can Online Voting System Change The Indifference Of Minority Shareholders?

Capital market designed two kinds of voting system for shareholders of listed companies, namely "vote by hand"(use their voting rights) and "vote by foot"(buy or sell stocks on secondary market). Existing literature suggests that, if minority shareholders choose "vote by hand" to participate in corporate decision-making, the cost and benefit is so unequal that it is unwise for minority shareholders to do this. Therefore, they usually vote with their feet to show their attitude. Many scholars have defined minority shareholder as "rational apathy" and "free rider". Minority shareholders, at root, are infringed of the two types of agency problem, which means that they have greatest inner incentive to protect their own interests.In order to overcome the apathy of small and medium-sized shareholders, and give full play to their effectiveness in corporate governance, Chinese system designers launched Split Share Reform and network voting system. As we known, network voting system can offset the disadvantage of traditional voting ways (such on-site attendance), and can save much cost for shareholders. This paper will focus on three questions:1.whether this system arrangement alleviate and change the indifference of small and medium-sized shareholders?2. Which factors can affect the degree of the indifference of this interest group?3. If minority shareholders actively take part in shareholders meeting, can they exert an influence on the outcome of the conference proposal?Based on the data of internet voting of Shenzhen Stock Exchange listed companies from2010to2013, we study whether proposals’ interest sensitive degree, companies’ability of make money and institutional shareholders’ ownership can influence the online voting activeness of minority shareholders? We combined empirical to case research method to answer the above three questions, and our outcomes shows are as follows:1.The network voting system indeed can increase the voting rate of minority shareholders in some certain situation. On the whole, this voting rate of interest group is not so high that can exert influence on outcome of shareholder meeting proposal.2. The higher proposal interest sensitivity (such as affiliated party proposal), the worse situation of company operating and the higher institutional shareholders’ownership, the higher online voting rate of minority shareholders.3.In most cases, minority shareholders unable to compete with the biggest shareholder. But in the following three cases, minority shareholders can have stronger "bargaining power":A. the use of equity division reform and the classified voting;B. involves related parties (such as the biggest shareholder), the related parties need to avoid to voting;C. disperse equity ownership structure, agency problem seriously and balancing ownership structure.Generally speaking, there is few existing literature that research on the change of voting rights, online voting system, minority shareholder governance function. I hope this article may make a possible marginal contribution to the research field.