Encouraging long-term shareholders: The effects of loyalty shares with double voting rights

François Belot, Edith Ginglinger and Laura T. Starks

Finance, 2023, vol. 44, issue 4, 3-61

Abstract: Loyalty shares, which are mechanisms designed to encourage long-term share ownership through disproportional voting rights, face questions regarding their benefits and costs. We examine these questions through a natural experiment—the passage of the Florange Act in France—that required firms to adopt loyalty shares unless shareholders voted to opt out. We find differences in market reactions: negative for firms opting out and positive for those newly adopting the shares. Providing comparative evidence across these firms and across the two-thirds of French firms that previously issued loyalty shares, we show how the benefits and costs of loyalty shares vary across firms. JEL classification: G32, G34

Keywords: Loyalty shares; one share-one vote; dual-class stock; long-term shareholders; blockholders; multiple voting rights; corporate governance; monitoring; R&D expenses (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2023
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Related works:
Working Paper: Encouraging long-term shareholders: The effects of loyalty shares with double voting rights (2019)
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