We examine the voting premium in Italy in the period 1974 to 2003, when it ranged from 1% to 100%. At firm level, the measure of the price differential between voting and non-voting stocks cannot be fully explained without taking into account the effect of the largest shareholder s identity. Family-controlled firms have higher voting premiums, especially when the family owns a large stake in the company s voting equity and the founder is CEO and/or chairman. We explain this result by showing that families attach greater importance to control and are more prone than other types of controlling shareholders to expropriate the non-voting class of shareholders.
Croci, E., Caprio, L., The Determinants of the Voting Premium in Italy: The Evidence from 1974 to 2003, <<JOURNAL OF BANKING & FINANCE>>, 2008; (32): 2433-2443 [http://hdl.handle.net/10807/9346]
The Determinants of the Voting Premium in Italy: The Evidence from 1974 to 2003
Croci, Ettore;Caprio, Lorenzo
2008
Abstract
We examine the voting premium in Italy in the period 1974 to 2003, when it ranged from 1% to 100%. At firm level, the measure of the price differential between voting and non-voting stocks cannot be fully explained without taking into account the effect of the largest shareholder s identity. Family-controlled firms have higher voting premiums, especially when the family owns a large stake in the company s voting equity and the founder is CEO and/or chairman. We explain this result by showing that families attach greater importance to control and are more prone than other types of controlling shareholders to expropriate the non-voting class of shareholders.
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