Voting rights and shareholder wealth the issuance of limited voting common stock

Abstract

Abstract This paper investigates the shareholder wealth consequences of the public announcements of the proposed issuance of multiple classes of common stock with disparate voting rights. The evidence suggests that, for our sample of 70 firms which proposed dual‐class recapitalizations over the period 1962–86, the creafion of dual classes of common stock, on average, leads to abnormal stock price increases. The data do not lend support to the hypothesis that the concentration of voting power with incumbent management is detrimental to shareholder interests.