TY - JOUR
T1 - The long-term valuation effects of voluntary dual class share unifications
AU - Lauterbach, Beni
AU - Pajuste, Anete
N1 - Publisher Copyright:
© 2015 Elsevier B.V.
PY - 2015/4/1
Y1 - 2015/4/1
N2 - We study 121 voluntary dual class share unification in Europe during 1996-2009, and uncover evidence suggesting a positive valuation response to governance improvements and a negative valuation response to possible financial tunneling. Corporate governance improvement is attained by abolishing the wedge between ownership and voting rights and by significantly decreasing controlling shareholders' voting power. Financial tunneling is suspected when some controlling shareholders use the unification hype to sell part or all of their holdings at inflated prices. On average, the corporate governance positive valuation effects prevail, and voluntary unifications are accompanied by a statistically and economically significant increase of Tobin's Q.
AB - We study 121 voluntary dual class share unification in Europe during 1996-2009, and uncover evidence suggesting a positive valuation response to governance improvements and a negative valuation response to possible financial tunneling. Corporate governance improvement is attained by abolishing the wedge between ownership and voting rights and by significantly decreasing controlling shareholders' voting power. Financial tunneling is suspected when some controlling shareholders use the unification hype to sell part or all of their holdings at inflated prices. On average, the corporate governance positive valuation effects prevail, and voluntary unifications are accompanied by a statistically and economically significant increase of Tobin's Q.
KW - Corporate governance improvements
KW - Dual class shares
KW - Financial tunneling
UR - http://www.scopus.com/inward/record.url?scp=84923289215&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2015.02.004
DO - 10.1016/j.jcorpfin.2015.02.004
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AN - SCOPUS:84923289215
SN - 0929-1199
VL - 31
SP - 171
EP - 185
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
ER -