The Media and Firm Reputation Roles in Corporate Governance Improvements: Lessons from European Dual Class Share Unifications

46 Pages Posted: 8 Sep 2014 Last revised: 11 Jan 2016

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)

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Date Written: January 1, 2015

Abstract

We study to what extent media pressure and firm's reputational concerns encourage corporate governance improvements. Our test sample comprises 72 European dual-class-shares firms that voluntarily unified their shares into a single class. We find that when the press' anti-dual-class-shares sentiment intensifies, the dual class firms' market valuation discount deepens, and the rate of unifications increases. We also show that dual-class firms that are more sensitive to public image (firms on the eve of an equity offering, and firms that invest more in Corporate Social Responsibility activities) are more likely to unify their dual class shares.

Suggested Citation

Lauterbach, Beni and Pajuste, Anete, The Media and Firm Reputation Roles in Corporate Governance Improvements: Lessons from European Dual Class Share Unifications (January 1, 2015). Available at SSRN: https://ssrn.com/abstract=2492754 or http://dx.doi.org/10.2139/ssrn.2492754

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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