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The Impact of a Break-Through Rule on European Firms

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Author Info

  • Bennedsen, Morten

    (Department of Economics, Copenhagen Business School)

  • Nielsen, Kasper

    (University of Copenhagen)

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    Abstract

    We analyze the impact of a 75 pct. Break-Through rule on 1,035 European firms with dual class shares. In 3-5 pct. of the firms the controlling owners incur a direct loss of control, whereas in additional 11-17 pct. of the firms the controlling owners are likely to incur a control loss. Firms in Germany, Italy and the Scandinavian countries are more likely to incur a control loss. We continue to estimate the restrictions that the Break-Through rule puts on these firms’ ability to issue new shares to outsiders without changing the control structure. We conclude that a significant number of the firms with dual class shares in the European Union will be affected by a 75 pct. Break- Through rule.

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    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/7514
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    Bibliographic Info

    Paper provided by Copenhagen Business School, Department of Economics in its series Working Papers with number 12-2002.

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    Length: 44 pages
    Date of creation: 01 Oct 2002
    Date of revision:
    Handle: RePEc:hhs:cbsnow:2002_012

    Contact details of provider:
    Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
    Phone: 38 15 25 75
    Fax: 38 15 34 99
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    Web page: http://www.cbs.dk/departments/econ/
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    Related research

    Keywords: Break-Through rule; Dual class shares; Corporate control; Takeovers and Voting rights;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998. "Corporate Ownership Around the World," NBER Working Papers 6625, National Bureau of Economic Research, Inc.
    2. Faccio, Mara & Lang, Larry H. P., 2002. "The ultimate ownership of Western European corporations," Journal of Financial Economics, Elsevier, vol. 65(3), pages 365-395, September.
    3. Erik Berglöf & Mike Burkart, 2003. "European takeover regulation," Economic Policy, CEPR & CES & MSH, vol. 18(36), pages 171-213, 04.
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    Cited by:
    1. Pajuste, Anete, 2005. "Determinants and consequences of the unification of dual-class shares," Working Paper Series 0465, European Central Bank.

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