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Journal Articles Journal of Financial Intermediation Year : 2011

Security Voting Structure and Bidder Screening


This paper demonstrates that non-voting shares can promote take- overs. When the bidder has private information, shareholders may refuse to tender because they suspect to sell at an ex post unfa- vourable price. The ensuing friction in the sale of cash flow rights can prevent an efficient change of control. Separating cash flow and voting rights alters the degree of cross-subsidization among bidder types. It can therefore be used as an instrument to promote takeover activity and to discriminate between efficient and ineffi- cient bidders. The optimal fraction of non-voting shares decreases with managerial ability, implying an inverse relationship between firm value and non-voting shares.
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halshs-01308325 , version 1 (30-08-2022)



Christian At, Mike Burkart, Samuel Lee. Security Voting Structure and Bidder Screening. Journal of Financial Intermediation, 2011, 20, pp.458-476. ⟨10.1016/j.jfi.2010.10.001⟩. ⟨halshs-01308325⟩


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