Ronald Anderson, Ezgi Ottolenghi, David Reeb, Pavel Savor
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引用次数: 0
Abstract
Despite exhibiting significant valuation discounts, dual-class shares surged from 1% of initial public offerings in 1980 to nearly half in recent years. This study investigates the potential harm of such structures by examining the identity and returns of minority shareholders. We find that sophisticated investors predominantly hold low-voting shares. Furthermore, outside shareholders earn a positive risk premium rather than suffering low returns, consistent with the hypothesis that market prices compensate for the risk associated with dual-class structures. Our analysis reveals that such structures are confounded with family control, which is present in 89% of dual-class firms in the Russell 3000. Interestingly, single-class firms with family shareholders also enjoy positive abnormal returns, implying minority shareholders care more about the presence of a controlling shareholder than a specific voting structure. This research contributes to the ongoing debate on restricting dual-class structures by highlighting the complex relationship between ownership, control, and shareholder returns.
期刊介绍:
Financial Management (FM) serves both academics and practitioners concerned with the financial management of nonfinancial businesses, financial institutions, and public or private not-for-profit organizations.