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

François Belot, Edith Ginglinger and Laura Starks
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François Belot: THEMA - Théorie économique, modélisation et applications - UPN - Université Paris Nanterre - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique
Laura Starks: University of Texas - UTHealth - The University of Texas Health Science Center at Houston

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Abstract: The 2014 passage of the Florange Act in France changed an opt-in provision for loyalty shares (allocating a second voting right for shares held at least two years) to an opt-out provision with shareholder approval. We find that before 2014, loyalty shares were popular among small family firms. Following the Act, firms with a one share – one vote structure that announced they would opt out of the law incurred a negative market reaction, suggesting that shareholders have a positive perception of loyalty shares. It appears that by encouraging costly monitoring by long-term shareholders, loyalty shares can benefit all shareholders.

Keywords: Shareholder vote; Institutional Ownership; Corporate Governance Regulation (search for similar items in EconPapers)
Date: 2019-05
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Published in 9th Financial Engineering and Banking Society international Conference, May 2019, Prague, Czech Republic

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Journal Article: Encouraging long-term shareholders: The effects of loyalty shares with double voting rights (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02291364

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