Corporate governance rules and the value of control - a study of German dual-class shares

Ulrike Hoffmann-Burchardi

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The paper uses a dataset of German dual-class shares during 1988-1997 to study the relationship between corporate governance rules and the price differential between voting and non-voting stock. In a first step the paper discusses how mechanisms to separate control from cash-flow rights relate to the value of control. Secondly the paper studies the impact of a new takeover regulation which was adopted in Germany in 1995 and introduced the mandatory bid rule. The paper analyses how minority voting an non-voting shareholders participate in transfers of corporate control under the alternative regulatory structures pre- and post 1995. It is further shown that a mandatory bid requirement reduces the potential control value of voting stock by restricting the ration of control to cash-flow rights.

Keywords: voting premium; corporate governance rules; transfers of corporate control; panel data (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Pages: 39 pages
Date: 1999-02-01
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:119130

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