Time-Variation of Dual-Class Premia

31 Pages Posted: 18 Mar 2019

See all articles by John Paul Broussard

John Paul Broussard

University of Oklahoma; Rutgers University; Estonian Business School

Mika Vaihekoski

University of Turku - Turku School of Economics; University of Turku, Turku School of Economics

Date Written: February 26, 2019

Abstract

Dual class shares have been in existence in financial markets for more than one hundred years. One class of shares provides superior voting power, while the other class provides preferential access to economic benefits. Extant literature suggests that superior voting class shares should trade at premium over the economic shares. We revisit the dual-class share phenomenon and document the time-variation characteristics of the dual-class premium. We connect the premium to voting rights, liquidity and disproportional dividend privileges. We also document relationship between the dual-class premium and legal and institutional structures.

Keywords: dual-class shares, voting rights, liquidity risk, dividend privileges

JEL Classification: G32, G34

Suggested Citation

Broussard, John Paul and Vaihekoski, Mika and Vaihekoski, Mika, Time-Variation of Dual-Class Premia (February 26, 2019). Available at SSRN: https://ssrn.com/abstract=3342202 or http://dx.doi.org/10.2139/ssrn.3342202

John Paul Broussard

University of Oklahoma ( email )

Norman, OK 73019
United States
4053255591 (Phone)

HOME PAGE: http://https://www.ou.edu/price/finance/faculty/john-paul-broussard

Rutgers University ( email )

Camden, NJ 08102
United States
+18562256647 (Phone)

Estonian Business School ( email )

A. Lauteri 3
Tallinn, 10114
Estonia

Mika Vaihekoski (Contact Author)

University of Turku - Turku School of Economics ( email )

Turku, 20014
Finland

HOME PAGE: http://users.utu.fi/moovai/

University of Turku, Turku School of Economics ( email )

Turku School of Economics
Dep. of Accounting and Finance
University of Turku, 20014
Finland
+358 2 33351 (Phone)

HOME PAGE: http://users.utu.fi/moovai/

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