Abstract

http://ssrn.com/abstract=2447097
 


 



Shareholder Decisionmaking in the Presence of Empty Voting and Hidden Ownership


Jordan M. Barry


University of San Diego School of Law

John William Hatfield


University of Texas at Austin

Scott Duke Kominers


Harvard University

August 5, 2014

San Diego Legal Studies Paper No. 14-161

Abstract:     
We consider securities markets in which economic interests in firms and shareholder voting rights are traded independently; such markets allow for "empty voters" who hold voting rights in a firm that exceed their economic interests. We demonstrate that, in such settings, competitive equilibria generally do not exist and may be inefficient even when they do exist. As the competitive equilibrium solution concept does not provide useful predictions in the presence of empty voting, we focus on cooperative game-theoretic "core outcomes." We show that core outcomes always exist, are always efficient, and can be reached from any initial allocation through voluntary trading; moreover, at a core outcome, agents have efficient incentives with regards to information revelation.

Number of Pages in PDF File: 42

Keywords: Empty Voting, Hidden/Morphable Ownership, Corporate Governance, Shareholder Voting

JEL Classification: C71, G14, G18, G30, K22, L29

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Date posted: June 8, 2014 ; Last revised: August 6, 2014

Suggested Citation

Barry, Jordan M. and Hatfield, John William and Kominers, Scott Duke, Shareholder Decisionmaking in the Presence of Empty Voting and Hidden Ownership (August 5, 2014). San Diego Legal Studies Paper No. 14-161. Available at SSRN: http://ssrn.com/abstract=2447097 or http://dx.doi.org/10.2139/ssrn.2447097

Contact Information

Jordan Barry
University of San Diego School of Law ( email )
5998 Alcala Park
San Diego, CA 92110-2492
United States
John William Hatfield
University of Texas at Austin ( email )
Austin, TX 78712
United States
Scott Duke Kominers (Contact Author)
Harvard University ( email )
One Brattle Square, suite 6
Cambridge, MA 02138
United States
HOME PAGE: http://www.scottkom.com/
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