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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 ()

Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) from Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi"

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 agency costs of equity. Our empirical results, obtained using an event-study methodology, regressions and matching estimators, support our research hypothesis that co-operative banks have greater agency costs of equity compared to joint stock banks, 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)
New Economics Papers: this item is included in nep-ban
Date: 2019-01
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Persistent link: https://EconPapers.repec.org/RePEc:mod:wcefin:0074

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