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RFS Advance Access originally published online on October 15, 2003
Review of Financial Studies 2004 17(4):1167-1184; doi:10.1093/rfs/hhg061
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The Review of Financial Studies Vol. 17, No. 4 © 2004 The Society for Financial Studies; all rights reserved.

The Value of Voting Rights to Majority Shareholders: Evidence from Dual-Class Stock Unifications

Shmuel Hauser
Ben-Gurion University and Rutgers University

Beni Lauterbach
Bar-Ilan University

Address correspondence to Beni Lauterbach, School of Business Administration, Bar-Ilan University, Ramat Gan 52900, Israel, or e-mail: lauteb{at}mail.biu.ac.il.

We study 84 dual-class stock unifications, where superior vote shareholders gave up their superior voting status (all firm stocks became "one share one vote") and received (in most cases) compensation in the form of additional shares. Unifications are essentially intrafirm transactions of voting rights, and afford observation of the intrafirm-assessed price of vote. The price of vote in unifications (1) increases with the percentage vote lost by the majority shareholders, (2) is higher in family-controlled firms, (3) decreases with institutional investor holdings, and (4) is similar to the "outside" price of vote implicit in the market prices of stocks.


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