The Value of Voting Rights to Majority Shareholders: Evidence from Dual Class Stock Unifications

35 Pages Posted: 19 Jul 2003

See all articles by Shmuel Hauser

Shmuel Hauser

Ben-Gurion University of the Negev - School of Management; Government of the State of Israel - Israel Securities Authority

Beni Lauterbach

Bar-Ilan University - Graduate School of Business Administration; European Corporate Governance Institute (ECGI)

Date Written: January 2004

Abstract

We study 84 dual class stock uni. cations, where superior vote shareholders gave up their superior voting status (all firm stocks became "one share one vote") and received (in most cases) compensation in the form of additional shares. Unifications are essentially intra-firm transactions of voting rights, and afford observation of the intra-firm assessed price of vote. The price of vote in unifications: 1) increases with the percentage vote lost by the majority shareholders, 2) is higher in family-controlled firms, 3) decreases with institutional investor holdings, and 4) is similar to the "outside" price of vote implicit in the market prices of stocks."

Keywords: Value of vote, majority shareholders, dual class stocks, closely held companies

JEL Classification: G34

Suggested Citation

Hauser, Shmuel and Lauterbach, Beni, The Value of Voting Rights to Majority Shareholders: Evidence from Dual Class Stock Unifications (January 2004). EFA 2003 Annual Conference Paper No. 148; ECGI - Finance Working Paper No. 33/2004. Available at SSRN: https://ssrn.com/abstract=424889 or http://dx.doi.org/10.2139/ssrn.424889

Shmuel Hauser

Ben-Gurion University of the Negev - School of Management ( email )

P.O. Box 653
Beer-Sheva 84105
Israel
+972 2 651 3939 (Phone)
+972 7 6472896 (Fax)

Government of the State of Israel - Israel Securities Authority

22 Kanfei Nesharim Street
Jerusalem 95464
Israel

Beni Lauterbach (Contact Author)

Bar-Ilan University - Graduate School of Business Administration ( email )

Ramat Gan
Israel

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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