Wealth Transfers in Dual Class Recapitalisations with the Rights Method: the Case of the Italian Stock Market
AbstractFirms which exhibit a dual or multiple class of shares structure are listed in the stock markets of numerous countries. Shares with superior voting rights usually sell at a premium. If a firm with at least two categories of outstanding shares issues new shares with the rights method, a wealth transfer among the various categories of shareholders may arise. This paper presents a model which describes the wealth transfer mechanism as well as some empirical evidence drawn from the Italian stock market. In some cases the recapitalisation operations favour non voting shareholders who are not in control. Some considerations which try to explain why such occurrence may arise are also advanced.
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Bibliographic InfoArticle provided by GDE (Giornale degli Economisti e Annali di Economia), Bocconi University in its journal Giornale degli Economisti e Annali di Economia.
Volume (Year): 57 (1998)
Issue (Month): 2 (September)
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Postal: via Sarfatti, 25 - 20136 Milano (Italy)
Web page: http://www.gde.unibocconi.it/
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- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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