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Dual Class Shares: Are There Returns Differences?

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  • Stephen R. Foerster
  • David C. Porter

Abstract

We examine dual classes of shares with identical dividends and liquidation treatment, but with different voting rights. We extend previous dud class studies by examining bid‐ask adjusted prices and by examining returns after controlling for bid‐ask spread and market value differences between voting classes. We establish that voting right differences, although related to price differences between superior and restricted voting shares, do not impact on average returns behavior. These findings are consistent with previously forwarded voting premium hypotheses.

Suggested Citation

  • Stephen R. Foerster & David C. Porter, 1993. "Dual Class Shares: Are There Returns Differences?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 20(6), pages 893-903, November.
    • Handle: RePEc:bla:jbfnac:v:20:y:1993:i:6:p:893-903
    DOI: 10.1111/j.1468-5957.1993.tb00300.x
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