Manuscript Type Empirical Research Question/Issue Does the smaller blockholder monitor or collude with a larger counterpart in a two‐blockholder firm? Does the larger blockholder prefer not to share private benefits with the smaller blockholder or partially yield control to the smaller counterpart in a coalition? What are the contingent factors that influence the conflict of interest among large shareholders? Research Findings/Insights In two‐blockholder firms, the voting power of the larger blockholder negatively impacts the presence of the cumulative voting rule, even if the rule is positively associated with firm value and provides the smaller blockholder a better opportunity to elect directors despite the competition from the larger blockholder. Voting power concentration negatively impacts the adoption of the cumulative voting rule in two‐blockholder firms. The more voting power a smaller blockholder can employ to contest the largest blockholder, the more likely the two‐blockholder firm will observe the cumulative voting rule. Two‐blockholder firms are more likely to observe the cumulative voting rule when a coalition of blockholders has voting power that falls far below a threshold that warrants control of the firm. Theoretical/Academic Implications The empirical analysis of the paper suggests that the larger blockholder is willing to defend the control of the firm and the ability to pursue private benefits at the cost of firm value. The smaller blockholder is more likely to yield to the power of the larger blockholder and choose to collude rather than compete with the largest blockholder. The motivation and ability of a smaller blockholder to monitor the larger blockholder is contingent upon the voting power balance of the two blockholders. Practitioner/Policy Implications Minority investors should be alert to potential collusion among large shareholders. Regulators should consider enforcing the cumulative voting rule more widely to facilitate shareholder democracy and improve firm value.