It is known that deviating from the one-share–one-vote principle through the issue of non-voting stock increases the value of outsiders' voting rights. We argue that the creation of a business group is another way to deviate from one-share–one-vote and we show that it produces a larger voting-share premium in holding companies. As a consequence, having both subsidiaries and non-voting stock produces a multiplier effect on the voting premium. The puzzling size of the premium in Italy was never related to the interaction of pyramiding and non-voting stock. Our empirical study confirms that the premium is larger for holding companies issuing non-voting stock than for similar operating companies without non-voting equity.

Business Groups, Dual Class Shares and the Value of the Voting Right

NICODANO, Giovanna
1998-01-01

Abstract

It is known that deviating from the one-share–one-vote principle through the issue of non-voting stock increases the value of outsiders' voting rights. We argue that the creation of a business group is another way to deviate from one-share–one-vote and we show that it produces a larger voting-share premium in holding companies. As a consequence, having both subsidiaries and non-voting stock produces a multiplier effect on the voting premium. The puzzling size of the premium in Italy was never related to the interaction of pyramiding and non-voting stock. Our empirical study confirms that the premium is larger for holding companies issuing non-voting stock than for similar operating companies without non-voting equity.
22(9),
1117
1137
http://www.sciencedirect.com/science/article/B6VCY-3W1R3P8-1/2/07391bb07a1a61f33155c63ab0a38cd2
Pyramids; Equity leverage; Ownership structure; Voting premium; Equity carve-outs
G. NICODANO
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2318/7728
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