What Determines the Value of Corporate Votes?
This paper studies the determinants of the value rights in U.S. corporations. Results support the hypothesis that the price of a vote is determined by the expected additional payment vote holders will receive for their votes in case of a control contest. The size of this differential payment is a function of the probability that a vote is pivotal in a control contest and the magnitude of the private benefits obtainable by controlling the company. Simple proxies for these two factors explain up to 30 percent of the variation of the voting premium across companies and through time. My findings also suggest that the value of managerial perquisites are, at least partially, reflected in the price of votes. Copyright 1995, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Volume (Year): 110 (1995)
Issue (Month): 4 (November)
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