What is it about?

This paper addresses the effect of having multiple large shareholders on shareholder protection. More specifically, we examine to what extent this effect depends on whether such large shareholders are beneficiary (they invest their own money) or fiduciary (they invest on behalf of a third party) .

Featured Image

Why is it important?

Building on recent developments in agency theory, this paper contributes to the corporate governance literature by empirically showing that potential “principal-principal” conflicts among large shareholders lead to overall better shareholder protection in terms of more formal governance mechanisms being adopted. This finding contrasts with situations in which there is only one large shareholder that does not have an interest in strengthening formal corporate governance. Our findings imply, however, that the characteristics of the large shareholders matter: Fiduciary shareholders in the Swiss setting are mostly passive buy-and-hold shareholders and therefore do not engage extensively in improving shareholder protection. Beneficiary shareholders, in contrast, directly intervene in the governance of the firm (i.e. governance by voice), so that in the presence of multiple beneficiary shareholders, more formal governance mechanisms help to monitor not only management but the other large shareholders as well. In addition, more formal governance mechanisms serve as a platform to coordinate their diverging objectives. Practitioner Implications We demonstrate the influence of a second (or several) large beneficiary shareholder(s), on corporate governance and the benefit to all shareholders. In addition, we propose the strengthening of governance mechanisms as a platform to reconcile conflicting interests among prominent shareholders and contribute to the debate on the allocation of certain voting privileges to long-term shareholders.


This paper adds an important contribution to understand how significant shareholders and different types of shareholders protect minority shareholders.

Dr Raul Barroso
ieseg school of management

Read the Original

This page is a summary of: Shareholder Protection: The Role of Multiple Large Shareholders, Corporate Governance An International Review, November 2015, Wiley, DOI: 10.1111/corg.12131.
You can read the full text:



The following have contributed to this page