Scandinavian Working Papers in Economics
Working Papers,
Copenhagen Business School, Department of Economics
No 12-2002: The Impact of a Break-Through Rule on European Firms
Morten Bennedsen and Kasper Nielsen
Additional contact information
Morten Bennedsen: Department of Economics, Copenhagen Business School, Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
Kasper Nielsen: University of Copenhagen, Postal: Centre for Economic and Business Research and, Centre for Applied Microeconometrics, University of Copenhagen
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 firms’ 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
44 pages, October 1, 2002
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