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

49 Pages Posted: 1 Sep 2012 Last revised: 16 May 2017

See all articles by Fabio Braggion

Fabio Braggion

Tilburg University - Tilburg University School of Economics and Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Mariassunta Giannetti

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

Multiple version iconThere are 2 versions of this paper

Date Written: May 10, 2017

Abstract

In the U.K., between 1955 and 1970, dual class shares quickly lost popularity without any regulatory intervention. The decline in the use of dual class shares was positively correlated with the relative valuations of one-share-one-vote and dual class firms, which in turn were related to media pessimism on the use of dual class shares. Following periods with high relative valuations of one-share-one-vote, one-share-one-vote firms exhibited lower returns than dual class firms suggesting that the latter were undervalued. These and other results suggest that investor demand may lead firms to abandon dual class shares.

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

JEL Classification: G3, G1, N24

Suggested Citation

Braggion, Fabio and Giannetti, Mariassunta, Changing Corporate Governance Norms: Evidence from Dual Class Shares in the U.K. (May 10, 2017). Journal of Financial Intermediation, Forthcoming, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 375/2013 , Available at SSRN: https://ssrn.com/abstract=2138949 or http://dx.doi.org/10.2139/ssrn.2138949

Fabio Braggion

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
329
Abstract Views
2,416
rank
102,180
PlumX Metrics