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The Impact of a Break-Through Rule on European Firms

Author

Listed:
  • Bennedsen, Morten

    (Department of Economics, Copenhagen Business School)

  • Nielsen, Kasper

    (University of Copenhagen)

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.

Suggested Citation

  • Bennedsen, Morten & Nielsen, Kasper, 2002. "The Impact of a Break-Through Rule on European Firms," Working Papers 12-2002, Copenhagen Business School, Department of Economics.
  • Handle: RePEc:hhs:cbsnow:2002_012
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    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/7514
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    References listed on IDEAS

    as
    1. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    2. Erik Berglöf & Mike Burkart, 2003. "European takeover regulation," Economic Policy, CEPR;CES;MSH, vol. 18(36), pages 171-213, April.
    3. repec:hrv:faseco:30747162 is not listed on IDEAS
    4. 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.
    5. Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Pajuste, Anete, 2005. "Determinants and consequences of the unification of dual-class shares," Working Paper Series 465, European Central Bank.
    2. Erik Berglöf & Mike Burkart, 2003. "European takeover regulation," Economic Policy, CEPR;CES;MSH, vol. 18(36), pages 171-213, April.

    More about this item

    Keywords

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

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • 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
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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