The value of corporate voting rights and control: A cross-country analysis

The value of corporate voting rights and control: A cross-country analysis This paper measures the value of corporate voting rights, specifically of the control block of votes , in a sample of 661 dual-class firms in 18 countries, in 1997. A consistent measure across countries is proposed. The measure is adjusted for takeover probability, block-holding costs, and dividend and liquidity differences between the share classes. The value of controlblock votes varies widely across countries. It is close to half of firm market value in South Korea, and close to zero in Finland. The value of control-block votes is interpreted as a lower bound for actual private benefits of the controlling shareholder. The legal environment, law enforcement, investor protection, takeover regulations, and power-concentrating corporate charter provisions explain 68% of the cross-country variation in the value of control-block votes. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economics Elsevier

The value of corporate voting rights and control: A cross-country analysis

Journal of Financial Economics, Volume 68 (3) – Jun 1, 2003

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Publisher
Elsevier
Copyright
Copyright © 2003 Elsevier Science B.V.
ISSN
0304-405x
D.O.I.
10.1016/S0304-405X(03)00069-2
Publisher site
See Article on Publisher Site

Abstract

This paper measures the value of corporate voting rights, specifically of the control block of votes , in a sample of 661 dual-class firms in 18 countries, in 1997. A consistent measure across countries is proposed. The measure is adjusted for takeover probability, block-holding costs, and dividend and liquidity differences between the share classes. The value of controlblock votes varies widely across countries. It is close to half of firm market value in South Korea, and close to zero in Finland. The value of control-block votes is interpreted as a lower bound for actual private benefits of the controlling shareholder. The legal environment, law enforcement, investor protection, takeover regulations, and power-concentrating corporate charter provisions explain 68% of the cross-country variation in the value of control-block votes.

Journal

Journal of Financial EconomicsElsevier

Published: Jun 1, 2003

References

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