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One Share – One Vote: new evidence from the Nordic countries

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  • Eklund, Johan E

    () (Ratio Institute, CESIS and JIBS)

Abstract

This paper examines how ownership concentration affects investment performance, and in particular how deviations from the one share-one vote principle affect this ownership-performance relationship. Using a unique panel from the Nordic countries the so-called incentive and managerial entrenchment effects are isolated. To this end a measure of marginal q is used to evaluate performance. This is a theoretically and empirically more appropriate measure of performance as compared to Tobin’s q. The main finding is that ownership concentration improves performance, whereas dual-class shares reduce the incentive effect and enhance the managerial entrenchment effect. On average, firms with dual-class shares over-invest.

Suggested Citation

  • Eklund, Johan E, 2009. "One Share – One Vote: new evidence from the Nordic countries," Working Paper Series in Economics and Institutions of Innovation 168, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0168
    as

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    File URL: https://static.sys.kth.se/itm/wp/cesis/cesiswp168.pdf
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    References listed on IDEAS

    as
    1. Per-Olof Bjuggren & Johan Eklund & Daniel Wiberg, 2007. "Ownership structure, control and firm performance: the effects of vote-differentiated shares," Applied Financial Economics, Taylor & Francis Journals, vol. 17(16), pages 1323-1334.
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    investment; marginal q; ownership concentration; one share-one vote;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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