The Long-Term Valuation Effects of Voluntary Dual Class Share Unifications

43 Pages Posted: 8 Sep 2014 Last revised: 19 Dec 2018

See all articles by Beni Lauterbach

Beni Lauterbach

Bar-Ilan University - Graduate School of Business Administration; European Corporate Governance Institute (ECGI)

Anete Pajuste

Stockholm School of Economics, Riga; European Gorporate Governance Institute (ECGI)

Date Written: January 1, 15

Abstract

We study 121 voluntary dual class share unification in Europe during 1996-2009, and uncover a mixed tale of governance improvements and shareholder expropriation. Corporate governance improvement is attained by abolishing the wedge between ownership and voting rights and by significantly decreasing controlling shareholders' voting power. Shareholder expropriation occurs when some controlling shareholders exploit the unification hype to sell part or all of their holdings at inflated prices. On average, the corporate governance positive valuation effects prevail, and voluntary unifications are accompanied by a statistically and economically significant increase of Q.

Suggested Citation

Lauterbach, Beni and Pajuste, Anete, The Long-Term Valuation Effects of Voluntary Dual Class Share Unifications (January 1, 15). Available at SSRN: https://ssrn.com/abstract=2492744 or http://dx.doi.org/10.2139/ssrn.2492744

Beni Lauterbach (Contact Author)

Bar-Ilan University - Graduate School of Business Administration ( email )

Ramat Gan
Israel

European Corporate Governance Institute (ECGI) ( email )

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

Anete Pajuste

Stockholm School of Economics, Riga ( email )

Strelnieku iela 4a
Riga, LV 1010
Latvia

European Gorporate Governance Institute (ECGI) ( email )

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

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