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Department of Economics, Copenhagen Business School Working Paper Series, Department of Economics, Copenhagen Business School

No 12-2002:
The Impact of a Break-Through Rule on European Firms

Morten Bennedsen and Kasper Nielsen

Abstract: We analyze the impact of a 75 pct. Break-Through rule on 1,035 European firms with dual class

shares. In 3-5 pct. of the firms the controlling owners incur a direct loss of control, whereas in

additional 11-17 pct. of the firms the controlling owners are likely to incur a control loss. Firms in

Germany, Italy and the Scandinavian countries are more likely to incur a control loss. We continue

to estimate the restrictions that the Break-Through rule puts on these firmsí ability to issue new

shares to outsiders without changing the control structure. We conclude that a significant number

of the firms with dual class shares in the European Union will be affected by a 75 pct. Break-

Through rule.

Keywords: Break-Through rule; Dual class shares; Corporate control; Takeovers and Voting rights; (follow links to similar papers)

JEL-Codes: G30; G32; G34; G38; (follow links to similar papers)

44 pages, October 1, 2002

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