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Shareholders' agreements and voting power. Evidence from Italian listed firms

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Author Info
Angelo Baglioni () (DISCE, Università Cattolica)

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Abstract

This work provides an empirical investigation of shareholders’ agreements signed in Italy over the last decade. The focus is on the impact of agreements on the voting power (Shapley value) of participants. The evidence shows that agreements produce a remarkable reshuffling of voting power. Two views are confronted. First: agreements allow the largest shareholder to increase his power beyond his own voting rights, exploiting a leverage effect. Second: agreements are a way to share control among a coalition of large shareholders, thus limiting the ability of the first one to extract private benefits of control. The leverage effect seems to prevail at lower levels of ownership concentration, while the shared control view works better at higher levels of ownership concentration. Supermajority rules – a tool to reach a more balanced distribution of power – are more likely to be adopted when the first owner has a larger equity stake.

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File URL: http://www.unicatt.it/Istituti/EconomiaFinanza/Quaderni/ief0081.pdf
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Publisher Info
Paper provided by Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE) in its series DISCE - Quaderni dell'Istituto di Economia e Finanza with number ief0081.

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Length: nn pages 21
Date of creation: May 2008
Date of revision:
Handle: RePEc:ctc:serie3:ief0081

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Related research
Keywords: Corporate governance; shareholders’ agreements; large shareholder; voting power; one-share-one-vote.;

Find related papers by JEL classification:
G3 - Financial Economics - - Corporate Finance and Governance

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References listed on IDEAS
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  7. Paolo, Santella & Carlo, Drago & Giulia, Paone, 2007. "Who cares about Director Independence?," MPRA Paper 2288, University Library of Munich, Germany. [Downloadable!]
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  11. Zingales, Luigi, 1994. "The Value of the Voting Right: A Study of the Milan Stock Exchange Experience," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 7(1), pages 125-48. [Downloadable!] (restricted)
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