Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 238: One Share-One Vote: New Empirical Evidence

Johan Eklund and Thomas Poulsen
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Johan Eklund: Jönköping International Business School and Ratio Institute
Thomas Poulsen: Copenhagen Business School

Abstract: Shares with more voting rights than cash flow rights provide their owners with a disproportional influence that is often found to destroy the value of outside equity. This is taken as evidence of discretionary use of power. However, concentration of power does not necessarily result from control enhancing mechanisms; it could also be that some shareholders retain a large block in a one share-one vote structure. In this paper, we develop a methodology to disentangle disproportionality, which allows us to test the effect of deviations from one share-one vote more precisely. Our empirical findings add to the existing literature.

Keywords: Ownership structure; one share-one vote; proportionality; performance; entrenchment

JEL-codes: G32; G34

28 pages, October 26, 2010

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