Abstract

http://ssrn.com/abstract=2138949
 


 



Changing Corporate Governance Norms: Evidence from the Dismissal of Dual Class Shares in the U.K.


Fabio Braggion


Tilburg University - Center and Faculty of Economics and Business Administration; Tilburg University - European Banking Center

Mariassunta Giannetti


Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

July 5, 2016

ECGI - Finance Working Paper No. 375

Abstract:     
In the U.K., between 1955 and 1970, dual class shares went from being popular to be nearly dismissed without any regulatory intervention. We show that the time-series decline in the use of dual class shares is positively correlated with alternative measures of the relative valuations of one-share-one-vote and dual class firms. Following periods with high relative valuations of one-share-one-vote, one-share-one-vote firms exhibit lower returns than dual class firms suggesting that the latter were undervalued. The relative valuations of single and dual class firms appear correlated with the tone of a debate on dual class shares in which no new material information was revealed. We perform a battery of tests suggesting that investor demand may have affected firms’ willingness to maintain existing dual class share structures.

Number of Pages in PDF File: 53

Keywords: Corporate Governance, Dual Class Shares, Investor Demand, Public Debate

JEL Classification: G3, G1, N24


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Date posted: September 1, 2012 ; Last revised: July 6, 2016

Suggested Citation

Braggion, Fabio and Giannetti, Mariassunta, Changing Corporate Governance Norms: Evidence from the Dismissal of Dual Class Shares in the U.K. (July 5, 2016). ECGI - Finance Working Paper No. 375. Available at SSRN: http://ssrn.com/abstract=2138949 or http://dx.doi.org/10.2139/ssrn.2138949

Contact Information

Fabio Braggion
Tilburg University - Center and Faculty of Economics and Business Administration ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Tilburg University - European Banking Center ( email )
PO Box 90153
Tilburg, 5000 LE
Netherlands

Mariassunta Giannetti (Contact Author)
Stockholm School of Economics ( email )
P.O. Box 6501
Sveavagen 65
SE-113 83 Stockholm
Sweden
+46 8 736 9607 (Phone)
+46 8 312 327 (Fax)
HOME PAGE: http://sites.google.com/site/mariassuntagiannetti/Home
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Swedish House of Finance ( email )
Drottninggatan 98
111 60 Stockholm
Sweden

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