Board informal hierarchy and minority shareholder protection: evidence from China

Purpose This paper aims to explore that in contemporary corporate governance, safeguarding the rights and interests of minority shareholders is essential for promoting transparency, enhancing investor confidence, and ensuring the efficient functioning of capital markets. Design/methodology/approach This paper investigates the effect of board informal hierarchy on the protection of minority shareholders. The study empirically analyzes the aforementioned relationship using panel data from Chinese A-share listed companies between 2013 and 2022. The Gini coefficient is used to operationalize board informal hierarchy and the moderating roles of ownership concentration are explored. Findings The results show that board informal hierarchy significantly enhances minority shareholder protection. Moreover, high ownership concentration weakens the beneficial impact of informal hierarchy on minority shareholder protection. Originality/value To the best of the authors’ knowledge, this study provides the first systematic evidence on how board informal hierarchy affects the protection of minority shareholders. It also contributes a governance framework that highlights the role of informal hierarchy in strengthening minority shareholder protection.