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
Date Written: October 1, 2007
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: Suggested Citation