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Security Voting Structure and Bidder Screening

Abstract : 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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https://halshs.archives-ouvertes.fr/halshs-01308325
Contributor : Christian At Connect in order to contact the contributor
Submitted on : Wednesday, April 27, 2016 - 3:33:09 PM
Last modification on : Thursday, January 13, 2022 - 11:58:21 AM

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  • HAL Id : halshs-01308325, version 1

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

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