DUAL CLASS SHARES: ARE THERE RETURNS DIFFERENCES?

We examine dual classes of shares with identical dividends and liquidation treatment, but with different voting rights. We extend previous dud class studies by examining bid‐ask adjusted prices and by examining returns after controlling for bid‐ask spread and market value differences between voting...

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Bibliographic Details
Published in:Journal of business finance & accounting 1993-11, Vol.20 (6), p.893-903
Main Authors: Foerster, Stephen R., Porter, David C.
Format: Article
Language:English
Subjects:
Class
Dividends
Hypotheses
Liquidity
Return on investment
Shareholders rights
Stock exchange
Stock rights
Studies
Voting
Voting rights
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Summary:We examine dual classes of shares with identical dividends and liquidation treatment, but with different voting rights. We extend previous dud class studies by examining bid‐ask adjusted prices and by examining returns after controlling for bid‐ask spread and market value differences between voting classes. We establish that voting right differences, although related to price differences between superior and restricted voting shares, do not impact on average returns behavior. These findings are consistent with previously forwarded voting premium hypotheses.
ISSN:0306-686X
1468-5957
DOI:10.1111/j.1468-5957.1993.tb00300.x