Loyalty Shares with Tenure Voting - A Coasian Bargain? Evidence from the Loi Florange Experiment

58 Pages Posted: 2 May 2018

See all articles by Marco Becht

Marco Becht

Solvay Brussels School of Economics and Management (ULB); European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Yuliya Kamisarenka


Anete Pajuste

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

Multiple version iconThere are 2 versions of this paper

Date Written: April 2018


French listed companies can issue shares that confer two votes per share after a holding period of at least two years (loyalty shares with tenure voting rights). In 2014 the default rule changed from one-share-one-vote to loyalty shares. The Coase theorem predicts that ceteris paribus shareholders rewrite the corporate charter to preserve the pre-reform structure. The theorem also predicts that the proportion of loyalty shares in initial public offerings is unchanged. The paper shows that most one-share-one-vote companies reverted to the prereform contract. The exception were firms with a stake held by the French state. In initial public offerings, the new default rule had an impact; the proportion of loyalty share statutes increased from about forty to fifty percent after the passage of the law. Companies that kept the same statutes have a significantly higher market to book ratio than companies forced into a different regime. The evidence is broadly consistent with the predictions of the Coase theorem, but only in the absence of conflicted parties with veto power.

Keywords: Loyalty shares, tenure voting, time-phased voting, dual-class shares, one-shareone-vote, Coase theorem

JEL Classification: D23, K22, G32, G34

Suggested Citation

Becht, Marco and Kamisarenka, Yuliya and Pajuste, Anete, Loyalty Shares with Tenure Voting - A Coasian Bargain? Evidence from the Loi Florange Experiment (April 2018). European Corporate Governance Institute (ECGI) - Law Working Paper No. 398/2018. Available at SSRN: https://ssrn.com/abstract=3166494 or http://dx.doi.org/10.2139/ssrn.3166494

Marco Becht (Contact Author)

Solvay Brussels School of Economics and Management (ULB) ( email )

42 Avenue F. D. Roosevelt
Brussels, 1050
+32 2 6504466 (Phone)

HOME PAGE: http://www.solvay.edu/profile/marcobecht

European Corporate Governance Institute (ECGI) ( email )

Palace of the Academies
Rue Ducale 1 Hertogstraat
Brussels, 1000

HOME PAGE: http://www.ecgi.global/users/marco-becht

Centre for Economic Policy Research (CEPR)

United Kingdom

Yuliya Kamisarenka

Independent ( email )

No Address Available

Anete Pajuste

Stockholm School of Economics, Riga ( email )

Strelnieku iela 4a
Riga, LV 1010

European Gorporate Governance Institute (ECGI) ( email )

B-1050 Brussels

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