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Corporate governance rules and the value of control - a study of German dual-class shares

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  • Hoffmann-Burchardi, Ulrike

Abstract

The paper uses a dataset of German dual-class shares during 1988-1997 to study the relationship between corporate governance rules and the price differential between voting and non-voting stock. In a first step the paper discusses how mechanisms to separate control from cash-flow rights relate to the value of control. Secondly the paper studies the impact of a new takeover regulation which was adopted in Germany in 1995 and introduced the mandatory bid rule. The paper analyses how minority voting an non-voting shareholders participate in transfers of corporate control under the alternative regulatory structures pre- and post 1995. It is further shown that a mandatory bid requirement reduces the potential control value of voting stock by restricting the ration of control to cash-flow rights.

Suggested Citation

  • Hoffmann-Burchardi, Ulrike, 1999. "Corporate governance rules and the value of control - a study of German dual-class shares," LSE Research Online Documents on Economics 119130, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:119130
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    File URL: http://eprints.lse.ac.uk/119130/
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    More about this item

    Keywords

    voting premium; corporate governance rules; transfers of corporate control; panel data;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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