Changing Corporate Governance Norms: Evidence from Dual Class Shares in the U.K.

Changing Corporate Governance Norms: Evidence from Dual Class Shares in the U.K.

Fabio Braggion, Mariassunta Giannetti

Series number :

Serial Number: 
375/2013

Date posted :

July 01 2013

Last revised :

October 28 2018
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Keywords

  • Category • 
  • Corporate governance • 
  • Dual Class Shares • 
  • Public Opinion

In the U.K., between 1955 and 1970, dual class shares quickly lost popularity without any regulatory intervention. The decline in the use of dual class shares was positively correlated with the relative valuations of one-share-one-vote and dual class firms, which in turn were related to media pessimism on the use of dual class shares.

Following periods with high relative valuations of one-share-one-vote, one-share-one-vote firms exhibited lower returns than dual class firms suggesting that the latter were undervalued. These and other results suggest that investor demand may lead firms to abandon dual class shares.

Published in

Published in: 
Publication Title: 
Journal of Financial Intermediation

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