The effect of voting rights on firm value

Cristina Mabel Scherrer and Marcelo Fernandes

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

Abstract: We present a simple framework for dual-class stock shares in which common shareholders receive public and private cash flows (i.e., dividends and any private benefit of holding voting rights) and preferred shareholders only receive public cash flows. We isolate these two cash flows in order to identify the role of voting rights on equity-holders' wealth. In particular, using a structural cointegrated VAR model, we find a negative relationship between the value of the voting right and the preferred shareholders' wealth.

Keywords: private benefits; voting right; dual-class shares (search for similar items in EconPapers)
JEL-codes: G15 G32 G34 G38 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2021-09-01
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Published in International Review of Finance, 1, September, 2021, 21(3), pp. 1106 - 1111. ISSN: 1369-412X

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Related works:
Journal Article: The effect of voting rights on firm value (2021)
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