The Impact of a Break-Through Rule on European Firms

Center for Economic and Business Discussion Paper

42 Pages Posted: 16 Nov 2002

See all articles by Morten Bennedsen

Morten Bennedsen

INSEAD - Economics and Political Sciences; University of Copenhagen - Department of Economics

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance

Date Written: September 4, 2002

Abstract

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

Bennedsen, Morten and Nielsen, Kasper Meisner, The Impact of a Break-Through Rule on European Firms (September 4, 2002). Center for Economic and Business Discussion Paper, Available at SSRN: https://ssrn.com/abstract=328020 or http://dx.doi.org/10.2139/ssrn.328020

Morten Bennedsen (Contact Author)

INSEAD - Economics and Political Sciences ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5, Bygn 26
Copenhagen, 1353
Denmark

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance ( email )

A4.17 Solbjerg Plads 3
Copenhagen, Frederiksberg 2000
Denmark

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