How to Make All Shareholders Equal: Evidence from Tickers' Informativeness

Abstract:     
This article investigates the benefits of market transparency by enhancing tickers' informativeness of stocks with non-conventional voting structure. Event study analysis shows that the TSX rule - to re-symbolise stocks with limited, multiple, restricted, subordinate, or no voting rights - had a negative and significant impact on the returns and the liquidity of the involved stocks. Equally important, I show that the voting premium, a proxy for the prevalence private benefits, has decreased significantly. Regression analysis suggests that a significant part of the variation in the event-driven results is explained by firm's agency costs, mainly the holding of the largest shareholder and her excess control. The evidence in this paper suggests that improving the information content of tickers of publicly traded securities have a significant impact on the ability of the market participants to revise the assessment of their holding (i.e. price-protect), emphasizing the importance of enhancing market transparency in curbing private benefits.

Number of Pages in PDF File: 35

Keywords: Transparency, ticker's informativeness, private benefits

JEL Classification: G32, G38

working papers series