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| Autori principali: | , , , |
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| Natura: | Artículo Open Access |
| Pubblicazione: |
Wiley
2025
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| Accesso online: | https://onlinelibrary.wiley.com/doi/10.1111/corg.70013 |
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Sommario:
- Retail Investor Governance and M&A Performance Chun Liu Qidan Liu Liang Sun Guojian Zheng Corporate Governance: An International Review ABSTRACT Research Question/Issue For a long time, retail investors have been deemed ineffective governors because of rational apathy. This study examines a central theoretical question: Absent any enhancements of their governance capability, is it sufficient to exogenously raise their exit costs—thereby increasing their willingness to voice—to activate retail investors' monitoring function and improve major corporate decisions (e.g., M&A)? Research Findings/Insights Exploiting a 2012 dividend tax reform in China targeted solely at individual investors as a quasi‐natural experiment, we find that this policy—by strengthening retail investors' willingness to govern through a lock‐in effect—significantly improves the M&A performance of affected firms. Mechanism tests indicate that the improvement stems from retail investors, once exit is impeded, more actively constraining managerial agency behavior. Theoretical/Academic Implications Our core theoretical contribution is to advance a new paradigm of cost‐driven governance, which offers a constraint‐based pathway—distinct from traditional empowerment approaches—to activate the governance role of retail investors. We provide evidence that rational apathy is not an inherent attribute of retail investors but an endogenous choice under a specific cost structure, which can be steered and reshaped through institutional design. Practitioner/Policy Implications This study offers regulators a new policy perspective: Beyond direct empowerment, regulators can adjust investors' exit–voice cost trade‐off through carefully crafted institutional designs (e.g., differentiated tax regimes). This reveals that taxation can serve as a potentially cost‐effective corporate governance tool to mobilize the vast retail investor base to play a more constructive role in corporate governance. 10.1111/corg.70013 http://onlinelibrary.wiley.com/termsAndConditions#vor