The Impact of a Break-Through Rule on European Firms
Center for Economic and Business Discussion Paper
42 Pages Posted: 16 Nov 2002
Date Written: September 4, 2002
We analyze the impact of a 75 pct. Break-Through rule on 1,035 European firms with dual class shares. In 3-5 pct. of the firms the controlling owners incur a direct loss of control, whereas in additional 11-17 pct. of the firms the controlling owners are likely to incur a control loss. Firms in Germany, Italy and the Scandinavian countries are more likely to incur a control loss. We continue to estimate the restrictions that the Break-Through rule puts on these firms ability to issue new shares to outsiders without changing the control structure. We conclude that a significant number of the firms with dual class shares in the European Union will be affected by a 75 pct. Break-Through rule.
JEL Classification: G30, G32, G34, G38
Suggested Citation: Suggested Citation