Bajuri, Norkhairul Hafiz and Chakravarty, Shanti and Hashim, Noor Hazarina
(2014)
Analysis Of Corporate Control:
Can The Voting Power Index Outshine
Shareholding Size?
Asian Academy of Management Journal of Accounting and Finance, 10 (1).
pp. 1-20.
ISSN 1823-4992
Abstract
Shareholding size is a poor proxy for corporate control. At best it reflects an investor’s
wealth relative to other shareholders and, most importantly, the distribution of rights to a
company’s worth and the related exposure to risk. Shareholding size does not actually
show an investor’s strength in corporate control. As an alternative, this paper espouses
the merits of the voting power concept and promotes two indices associated with it: the
Penrose-Banzhaf index and the Shapley-Shubik index. This paper further introduces a
new framework that compares the strength of corporate control against the size of
corporate shareholding. Illustrating this idea using a group of government-linked
companies (GLCs), this study yielded two possible ways in which the government can
consolidate its control.
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