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Encouraging long-term shareholders: The effects of loyalty shares with double voting rights

Author

Listed:
  • François Belot

    (THEMA - Théorie économique, modélisation et applications - UPN - Université Paris Nanterre - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique)

  • Édith Ginglinger

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Laura Starks

    (University of Texas - UTHealth - The University of Texas Health Science Center at Houston)

Abstract

The 2014 passage of the Florange Act in France changed an opt-in provision for loyalty shares (allocating a second voting right for shares held at least two years) to an opt-out provision with shareholder approval. We find that before 2014, loyalty shares were popular among small family firms. Following the Act, firms with a one share – one vote structure that announced they would opt out of the law incurred a negative market reaction, suggesting that shareholders have a positive perception of loyalty shares. It appears that by encouraging costly monitoring by long-term shareholders, loyalty shares can benefit all shareholders.

Suggested Citation

  • François Belot & Édith Ginglinger & Laura Starks, 2019. "Encouraging long-term shareholders: The effects of loyalty shares with double voting rights," Post-Print hal-02291364, HAL.
    • Handle: RePEc:hal:journl:hal-02291364
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    Cited by:

    1. Bajo, Emanuele & Barbi, Massimiliano & Bigelli, Marco & Croci, Ettore, 2020. "Bolstering family control: Evidence from loyalty shares," Journal of Corporate Finance, Elsevier, vol. 65(C).

    More about this item

    Keywords

    Shareholder vote; Institutional Ownership; Corporate Governance Regulation;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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