TITLE

Relative Prices of Dual Class Shares

AUTHOR(S)
Smith, Brian F.; Amoako-Adu, Ben
PUB. DATE
June 1995
SOURCE
Journal of Financial & Quantitative Analysis;Jun95, Vol. 30 Issue 2, p223
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Empirical studies of dual class shares indicate that superior voting shares (SVS) sell at a premium relative to their counterpart restricted shares (RVS). This paper uses Toronto Stock Exchange data to show that SVS price premium over RVS reflects the expected takeover premium paid to shareholders outside the control block. Thus, marginal shareholders pay a higher SVS price in anticipation of receiving a differential takeover bid as suggested by the extra merger hypothesis. Further analysis indicates that voting power increases the price premium while ownership, size, and the higher, trading liquidity of RVS are inversely related to the premium.
ACCESSION #
9507281638

Tags: DUAL class stocks;  STOCKHOLDERS' voting;  STOCKHOLDERS' pre-emptive rights;  STOCKS (Finance) -- Prices;  CORPORATIONS -- Finance;  STOCKHOLDERS

 

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