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RFS Advance Access published online on October 15, 2003
Review of Financial Studies, doi:10.1093/rfs/hhg061
Review of Financial Studies © The Society for Financial Studies 2003; all rights reserved
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© 2003 The Society for Financial Studies

Original Articles

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

Shmuel Hauser 1 and Beni Lauterbach 2*
1 School of Management, Ben-Gurion University of the Negev, Beer-Sheva, Israel; School of Business, Rutgers University Camden, USA
2 School of Business Administration, Bar-Ilan University, Ramat Gan 52900, Israel

* To whom correspondence should be addressed. E-mail: lauteb{at}mail.biu.ac.il.


  Abstract

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 intra-firm transactions of voting rights, and afford observation of the intra-firm 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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