The Determinants of the Voting Premium in Italy: The Evidence from 1974 to 2003

38 Pages Posted: 20 Apr 2006 Last revised: 3 Nov 2008

See all articles by Ettore Croci

Ettore Croci

Catholic University of the Sacred Heart of Milan

Lorenzo Caprio

Università Cattolica del Sacro Cuore, Milano

Date Written: October 1, 2007

Abstract

We examine the voting premium in Italy in the period 1974 to 2003, when it ranged from 1% to 100%. At firm level, the measure of the price differential between voting and non-voting stocks cannot be fully explained without taking into account the effect of the largest shareholder's identity. Family-controlled firms have higher voting premiums, especially when the family owns a large stake in the company's voting equity. We explain this result by showing that families attach greater importance to control and are more prone than other types of controlling shareholders to expropriate the non-voting class of shareholders.

Keywords: Voting premium, voting rights, non-voting shares, Italy

JEL Classification: G34

Suggested Citation

Croci, Ettore and Caprio, Lorenzo, The Determinants of the Voting Premium in Italy: The Evidence from 1974 to 2003 (October 1, 2007). Journal of Banking and Finance, Vol. 32, No. 2433-2443, 2008. Available at SSRN: https://ssrn.com/abstract=896677 or http://dx.doi.org/10.2139/ssrn.896677

Ettore Croci (Contact Author)

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Lorenzo Caprio

Università Cattolica del Sacro Cuore, Milano ( email )

Largo Gemelli, 1
Milan, Milan 20122
Italy
02 7234.2768 (Phone)

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