Conflict of interest in differentiated voting rights: A comparative examination of company laws

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Abstract

This study investigates the effects of differentiated voting rights (DVRs), particularly dual-class share structures and unequal voting rights, on corporate governance quality and conflicts of interest in listed firms across China, Malaysia, and Europe. Drawing upon agency theory and prior works on control entrenchment and minority shareholder protection (Slotwinski et al., 2023), this research examines how governance mechanisms mediate the negative outcomes of DVRs, with ownership concentration acting as a contextual moderator. A multi-group structural equation modeling (SEM) approach was employed using SmartPLS on a sample of 240 firms (93 from China, 79 from Malaysia, and 68 from Europe), with data derived from secondary corporate filings and governance reports. Measurement scales were adapted from established studies to ensure consistency and validity. The results confirm that DVRs increase the likelihood of conflicts of interest and deteriorate governance quality. However, effective governance frameworks significantly mitigate these adverse effects, and the moderating role of ownership concentration reveals cross-regional differences in governance outcomes. This study contributes to the literature on corporate governance and control rights by empirically validating the mediating and moderating dynamics within diverse institutional settings and offers implications for policymakers aiming to balance innovation and shareholder protection in firms with complex control structures.

Keywords: Differentiated Voting Rights (DVRs), Dual-Class Share Structure, Unequal Voting Rights, Corporate Governance Quality, Conflicts of Interest, Ownership Concentration

Authors’ individual contribution: Conceptualization — X.Z.; Methodology — X.Z.; Software — X.Z. and H.S.M.N.A.; Formal Analysis — X.Z.; Investigation — X.Z.; Data Curation — X.Z. and H.S.M.N.A.; Writing — Original Draft — X.Z.; Writing — Review & Editing — X.Z. and H.M.A.; Visualization — X.Z. and H.S.M.N.A.; Project Administration — H.M.A.; Supervision — H.M.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G34, K22, L22

Received: 23.05.2025
Revised: 08.08.2025; 26.09.2025
Accepted: 24.10.2025
Published online: 27.10.2025

How to cite this paper: Zheng, X., Mohd Ali, H., & Shaik Md Noor Alam, H. (2025). Conflict of interest in differentiated voting rights: A comparative examination of company laws [Special issue]. Corporate Law & Governance Review, 7(3), 211–222. https://doi.org/10.22495/clgrv7i3sip6