Security-voting structure and equity financing in the banking sector: ‘one head-one vote’ versus ‘one share-one vote’

Riccardo Ferretti, Pierpaolo Pattitoni and Alex Castelli ()
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Alex Castelli: University of Reading

Journal of Management & Governance, 2019, vol. 23, issue 4, No 12, 1063-1097

Abstract: Abstract Using a unique dataset including all rights issues of new shares and other equity-like securities announced by Italian listed banks between 1989 and 2014, and exploiting the ideal setting provided by the Italian Banking Law, which allows for listed co-operative banks, we test if the ‘one head-one vote’ principle of co-operative banks and the ‘one share-one vote’ voting system of joint stock banks imply different costs of equity. Our empirical results, obtained using an event-study methodology, regressions and matching estimators, support our research hypothesis that the one head-one vote principle makes it more difficult raising new capital compared to one share-one vote principle, and contribute to the literature on demutualization and cooperative hybrids.

Keywords: Agency costs; Banks; Corporate governance; Corporate control; Seasoned Equity Offering (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)

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Working Paper: Security-voting structure and equity financing in the Banking Sector: ‘One Head-One Vote’ versus ‘One Share-One Vote’ (2019)
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DOI: 10.1007/s10997-019-09451-7

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