Staggered Boards and the Value of Voting Rights

This paper examines the impact of staggered boards on the value of voting rights (i.e., the voting premium) estimated using option prices. We find companies with staggered boards have a higher voting premium. Exploiting plausibly exogenous court rulings, we confirm that weakening the effectiveness of staggered boards decreases the voting premium. Given that the voting premium reflects private benefits consumption and associated managerial inefficiencies, our findings are consistent with the entrenchment view of staggered boards. Analyzing the cross-sectional heterogeneity in our sample, we find the entrenchment effect of staggered boards to be particularly pronounced for firms in noncompetitive industries and for mature firms.

Voting Premium in Italy: An Analysis over a 30-Year Period

We investigate the different aspects affecting the control premium by carrying out an empirical analysis on the respective in the Italian stock market since 1987 employing the Voting Premium methodology. We demonstrate how the introduction of new regulations in this field in 2012 has contributed to a substantial premium reduction. The impact of the aforementioned regulations needs to be examined within the macroeconomic setting that has distinguished the period of reference, particularly the last decade, within which the decision to raise the tax rate on financial yields needs to be contextualized.

Positive or negative voting premium: What happened to private benefits in Italy?

A large body of research deals with voting premium as a proxy of private benefit of control. Almost all of them find positive voting premium, in particular in Italy. Therefore appears interesting to ask what is the current status of private benefits of control in Italy in the last decade (2007-2017). Surprisingly, we show three major findings: i) reduction of non-voting share in the Italian scenario; ii) prevalence of negative voting rights premium more than positive ones, thus conflicting with the assumption and the observations by other researchers; iii) limits of the voting premium method. Our aim is that this study, despite its limitations, may encourage further researches focused on the analysis of the improvement and the change in the Italian corporate governance. The article points out that interesting evidence already exists, although still much remains to do in the future.

Editorial

The recent issue of the journal “Corporate Ownership and Control” is devoted to the issues of market concentration, capital structure, MENA economies, corporate governance, family firms, socioemotional wealth, loan appraisal process, corporate social responsibility, financial performance, cash holdings, trade-off theory, auditing, internal and external control, ownership structure of enterprises, voting premium, corporate control, corporate reputation, government policy, social impact bond etc.

The Diminishing Benefits of U.S. Cross-Listing: Economic Consequences of SEC Rule 12h-6

On Mar. 21, 2007, the U.S. Securities and Exchange Commission (SEC) passed Exchange Act Rule 12h-6 to make it easier for cross-listed firms to deregister from the U.S. market and escape its regulatory costs. Using difference-in-difference (DD) tests, we find that, on average, Rule 12h-6’s passage induced an increase in voting premium, a decline in equity raising, and a decline in cross-listing premium. These effects are observed for exchange-listed firms and for firms from countries with weak investor protection. We conclude that although cross-listed firms are still valued at a significant premium over non-cross-listed firms, the rule decreased the value of commitment to the U.S. regulatory system.

What Accounts for the Union Member Advantage in Voter Turnout? Evidence from the European Union, 2002-2008

Across countries, union membership and voter turnout are highly correlated. In unadjusted terms, union members maintain a roughly 0.10 to 0.12 point gap in voting propensity over non-members. We motivate empirically and propose a model—with three causal channels—that explains this correlation and then empirically tests for the contribution of each channel to the overall union voting gap. The first channel by which union members are more likely to vote is through the so-called "monopoly-face" of unionism (i.e., unionization increases wages for members and higher incomes are a significant positive determinant of voting). The second is the so-called "social custom" model of unionism, which argues that union co-worker peer pressure creates incentives to vote amongst members for the purpose of having cast a ballot or being seen at the voting poll. The third and final channel is based on the "voice-face" of unionism whereby employees who are (or have been) exposed to the formalities of collective bargaining and union representation at the workplace are also more likely to increase their attachment to structures of democratic governance in society as well. We test to see how much of the raw "union voting premium" is accounted for by these three competing channels, using contemporary data from 29 European countries. We find that all three channels are at work, with voice the dominant effect (half of the overall gap attributed to this channel) and the other two (monopoly and social custom), each accounting for approximately one-fourth of the overall union voting gap.

Does Mandatory Adoption of International Financial Reporting Standards Decrease the Voting Premium for Dual-Class Shares?

ABSTRACT I examine whether voting premiums are reduced following mandatory International Financial Reporting Standards (IFRS) adoption for firms that have a dual-class share structure. I find that mandatory adopters' voting premiums decrease, on average, by 8 percent subsequent to mandatory IFRS adoption. This effect is statistically significant relative to the corresponding effect for non-IFRS adopters. Further, I find that this effect is more pronounced in countries with strong legal enforcement and for mandatory adopters that experience an increase in the transparency and comparability of reported information under the new accounting regime. Taken together, these results support the view that mandatory IFRS adoption benefits minority shareholders by providing an effective mechanism to constrain the private benefits of control. However, one should interpret these results with caution as concurrent efforts to strengthen corporate governance regimes and the enforcement of corporate and securities laws may also contribute to the decrease in voting premiums documented in this paper. Data Availability: Data used in this study are available from the sources listed in the text.