Unbundling the Voting Rights and Profit Claims of Common Shares
AbstractThe authors analyze a model of a hostile takeover attempt in which shareholders are free to sell common-share voting rights, as well as the shares themselves. Without taxation, only welfare-improving takeovers succeed. Allowing vote sales has no effect on the success of attempted takeovers or the profits of incumbent management or raiders. When taxes are levied, however, an inefficiently small number of value-increasing takeovers succeed if vote sales are prohibited. Allowing vote sales facilitates such takeovers and raises welfare. With taxation, incumbents would never prefer to defend against takeovers by purchasing votes, but raiders might well prefer this method. Copyright 1989 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 97 (1989)
Issue (Month): 2 (April)
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- Nicodano, Giovanna, 1998. "Corporate groups, dual-class shares and the value of voting rights," Journal of Banking & Finance, Elsevier, vol. 22(9), pages 1117-1137, September.
- Hu, Henry T.C. & Black, Bernard, 2007. "Hedge funds, insiders, and the decoupling of economic and voting ownership: Empty voting and hidden (morphable) ownership," Journal of Corporate Finance, Elsevier, vol. 13(2-3), pages 343-367, June.
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- Neeman, Zvika & Orosel, Gerhard O., 2006. "On the efficiency of vote buying when voters have common interests," International Review of Law and Economics, Elsevier, vol. 26(4), pages 536-556, December.
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