Download or read book Dual Class Stock Unifications and Shareholders Expropriation written by Marco Bigelli and published by . This book was released on 2004 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: An increasing number of firms with dual class shares are deciding to unify their shares around the world. In the most common type of stock unification a non-voting share can be converted into a voting share. In most countries either the price differential between the two classes of shares is low or a form of compensation for voting shareholders is provided. Italian stock unifications see the highest value of voting rights and no form of compensation for voting shareholders. I observe the 43 Italian stock unifications made in the 1974-2003 period and I develop a model that quantifies their wealth effects on the two classes of shares. Stock unifications can be a form of expropriation of minority voting shareholders, as confirmed by five case studies where majority shareholders hedge or even take advantage of such unifications by engaging in the following activities some months before the unification decision: buying relevant blocks of nv-shares, selling voting shares or approving stock option plans on nv-shares. At the stock unification announcement the price of a voting share in the five case studies dropped by a minimum of -4,26%, to a maximum of -10,41% confirming that dual class unifications can expropriate minority-voting shareholders to the benefit of the controlling shareholder and quot;luckyquot; minority nv-shareholders.

Download or read book Unifications of Dual Class Shares in Germany First Empirical Evidence on Liquidity Effects of Share Class Unifications written by Olaf Ehrhardt and published by . This book was released on 2008 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the unification of non-voting preference shares into a one share-one vote structure using a sample of all German dual-class companies from 1987 until 2003. We test several hypotheses with regard to the reasons for the abolition of preference shares. First, as the separation of ownership and control is viewed as a means of keeping control over a firm, a detailed analysis of changes in the ownership structure of firms abolishing their preference shares is performed. Indeed, family firms losing the majority of control by unifying their share classes seem to restrain from this step by selling controlling blocks before the unification. Second, dualclass firms may comprise higher agency costs due to the violation of the one share-one vote rule and, thus, face higher costs of equity capital. We apply two methods for estimating changes in the cost of capital of unifying firms : (i) we perform an event study to examine the market reaction to the announcement of share class unifications and (ii) we investigate bid-ask spreads before and after the unification computed from intraday trading data to analyze liquidity effects on the cost of capital associated with the unification. In sum, the unification of dual-class preference shares into single-class voting shares seems to be strictly shareholder value increasing. Dual-class firms seem to be able to significantly reduce their cost of capital through unification, because of increases in firm value as well as a substantial reduction in bid-ask spreads.

Download or read book Timing and Wealth Effects of German Dual Class Stock Unifications written by Ingolf Dittmann and published by . This book was released on 2006 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the reasons and the costs of separating ownership from control by analyzing the decision of German dual class firms to consolidate their share structure from dual to single class equity between 1990 and 2001. We find that the firm value increases significantly by an average 4% on the announcement day. A significant part of the variation in abnormal returns can be explained by the ownership structure and by changes in liquidity. A logit analysis of the unification decision yields that firms are more likely to unify if their controlling shareholder loses only little voting power in a stock unification. Also, firms that are financially constrained are more likely to abolish dual class shares; these firms often issue additional shares after the stock unification.A previous version of this paper was circulated via SSRN under the title When do Firms Abolish Dual-Class Stocks?

Download or read book Unifications of dual class shares written by and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Determinants and Consequences of the Unification of Dual class Shares written by Anete Pajuste and published by . This book was released on 2005 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Long Term Valuation Effects of Voluntary Dual Class Share Unifications written by Beni Lauterbach and published by . This book was released on 2018 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study 121 voluntary dual class share unification in Europe during 1996-2009, and uncover a mixed tale of governance improvements and shareholder expropriation. Corporate governance improvement is attained by abolishing the wedge between ownership and voting rights and by significantly decreasing controlling shareholders' voting power. Shareholder expropriation occurs when some controlling shareholders exploit the unification hype to sell part or all of their holdings at inflated prices. On average, the corporate governance positive valuation effects prevail, and voluntary unifications are accompanied by a statistically and economically significant increase of Q.

Download or read book Index Membership Vs Loss of Voting Power written by André Betzer and published by . This book was released on 2017 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: A change in the index selection rules of Deutsche Börse provides a unique opportunity to investigate the drivers behind the decision to abolish dual-class shares. As of June 2002, selection is based on the market capitalization of the free-float of the more liquid share class rather than the overall market capitalization. Hence, firms have had to reassess the benefits from their dual-class shares by weighing them against the cost from foregone index weight associated with having two share classes. Our findings suggest that index membership significantly affects the controlling shareholder's motivation to unify preferred and common stock.

Download or read book Long Term Changes in Voting Power and Control Structure Following the Unification of Dual Class Shares written by Beni Lauterbach and published by . This book was released on 2009 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Comment Letters to NASDAQ and NYSE written by Bernard S. Sharfman and published by . This book was released on 2019 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: I am responding to the Council of Institutional Investors' (“CII”) request that the NASDAQ Stock Market (“NASDAQ”) and New York Stock Exchange amend its listing standards to require companies seeking to go public with dual class shares (classes of common stock with unequal voting rights) to include in their certificates of incorporation a time-based sunset provision (a forced unification of shares into one share structure with equal voting rights after a certain period of time) that must go into effect no more than seven years after the initial public offering (IPO) unless the minority shareholders vote to extend up to an additional seven years. These letters (both letters have been combined into one document) argue that such a mandatory provision would be extremely unwise and harmful to our most important public companies and their shareholders, current as well as future. As a creation of private ordering, the absence of time-based sunset provisions in dual class share structures serves a significant value enhancing purpose. It prevents the risk that a pre-mature and therefore suboptimal unification of shares may occur. This risk has so far been ignored by those advocating for the implementation of a mandatory time-based sunset provision.

Download or read book Index Membership Vs Loss of Control written by André Betzer and published by . This book was released on 2012 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: "A change in the index selection rules of Deutsche Borse provides a unique opportunity to investigate the drivers behind the decision to abolish dual-class shares. As of June 2002, selection is based on the market capitalization of the free-float of the core liquid share class rather than the overall market capitalization. As a result, firms have had to reassess the benefits from their dual-class shares in the light of the costs from dropping out of their index. Our findings suggest that index membership significantly affects the controlling shareholder's motivation to unify preferred and common stock."--Abstract.

Download or read book Unifications of Dual class Shares in Germany written by and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Value of Voting Rights to Majority Shareholders written by Shmuel Hauser and published by . This book was released on 2009 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study 84 dual class stock uni. cations, where superior vote shareholders gave up their superior voting status (all firm stocks became quot;one share one votequot;) 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 quot;outsidequot; price of vote implicit in the market prices of stocks.quot.

Download or read book The Value of Voting Rights to Majority Shareholders written by Shmuel Hauser and published by . This book was released on 2004 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Do Voting Rights Affect Institutional Investment Decisions Evidence from Dual Class Firms written by Kai Li and published by . This book was released on 2009 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether, and to what extent, shareholder voting rights affect institutional investment decisions. Our analysis compares institutional investment in dual-class firms, where multiple share classes carrying differential voting rights allow insiders to control the firm and leave outside investors with little or no control rights, to that in single-class firms, where each share carries one vote. We find that institutional ownership in dual-class firms is significantly lower than it is in single-class firms after controlling for other determinants of institutional investment. Although institutions of all types hold less of the shares of dual-class firms, this avoidance is more pronounced for long-term investors with strong fiduciary responsibilities than for short-term investors with weak fiduciary duties. Following the unification of dual-class shares into a single-class, institutional investors increase their shareholdings in the unifying firm. Overall, our results suggest that voting rights are an important determinant of institutional investment decisions.

Download or read book Share Unifications in Switzerland written by Lukas Oppermann and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the timing effects of stock unifications using a sample of Swiss dual-class companies from 1996 to 2010. Seven hypotheses regarding the reason why companies abolish their dual-class structures are tested. Evidence is presented that the expected loss in voting power as well as the level of private benefits were a main force driving the decision whether to unify or not. A logit regression shows that a smaller difference between voting and capital rights increases the likelihood to unify. The same holds true for having a financial investor as major shareholder and possessing a cross-listing on an American exchange. On the other hand, having members of the founding family as significant investor entails the opposite effect. In contrast to related literature, no relation between growth opportunities or financial entrenchment and the decision to unify can be found in the case of Switzerland. Next to being the first study which provides empirical insights into why and when Swiss firms agreed to a stock unification, this paper contributes to the further understanding of key characteristics of Swiss dual-class firms around the turn of the millennium.

Download or read book The Media and Firm Reputation Roles in Corporate Governance Improvements written by Beni Lauterbach and published by . This book was released on 2016 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study to what extent media pressure and firm's reputational concerns encourage corporate governance improvements. Our test sample comprises 72 European dual-class-shares firms that voluntarily unified their shares into a single class. We find that when the press' anti-dual-class-shares sentiment intensifies, the dual class firms' market valuation discount deepens, and the rate of unifications increases. We also show that dual-class firms that are more sensitive to public image (firms on the eve of an equity offering, and firms that invest more in Corporate Social Responsibility activities) are more likely to unify their dual class shares.

Download or read book Founders without Limits written by Bobby Reddy and published by Cambridge University Press. This book was released on 2021-11-11 with total page 487 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first comprehensive collation of the international history of, and evidence on, dual-class stock, and their relevance to UK policy.