IDEAS home Printed from https://ideas.repec.org/p/wrk/warwec/563.html
   My bibliography  Save this paper

An Empirical Comparison of the Performance of Classical Power Indices

Author

Listed:
  • Leech, D.

Abstract

This paper assesses the indices against a set of reasonable criteria in terms of shareholder voting power and the control of the corporation in a large cross section of British companies. Each company is a separate voting body and there is much variation in the distribution of voting shares among them. Moreover reasonable criteria exist against which to judge the indices. New algorithms for the Shapley-Shubik and Banzhaf indices are applied to detailed data on beneficial ownership of 444 large UK companies without majority control.

Suggested Citation

  • Leech, D., 2000. "An Empirical Comparison of the Performance of Classical Power Indices," The Warwick Economics Research Paper Series (TWERPS) 563, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:563
    as

    Download full text from publisher

    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp563.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Pohjola, Matti, 1988. " Concentration of Shareholder Voting Power in Finnish Industrial Companies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(2), pages 245-253.
    2. 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.
    3. Philip Straffin, 1977. "Homogeneity, independence, and power indices," Public Choice, Springer, vol. 30(1), pages 107-118, June.
    4. Dan S. Felsenthal & Moshé Machover, 1998. "The Measurement of Voting Power," Books, Edward Elgar Publishing, number 1489.
    5. Roth, Alvin E., 1977. "Utility functions for simple games," Journal of Economic Theory, Elsevier, vol. 16(2), pages 481-489, December.
    6. Pradeep Dubey & Lloyd S. Shapley, 1979. "Mathematical Properties of the Banzhaf Power Index," Mathematics of Operations Research, INFORMS, vol. 4(2), pages 99-131, May.
    7. Dennis Leech, 1988. "The Relationship Between Shareholding Concentration and Shareholder Voting Power in British Companies: A Study of the Application of Power Indices for Simple Games," Management Science, INFORMS, vol. 34(4), pages 509-527, April.
    8. J. W. Milnor & L. S. Shapley, 1978. "Values of Large Games II: Oceanic Games," Mathematics of Operations Research, INFORMS, vol. 3(4), pages 290-307, November.
    9. Shapley, L. S. & Shubik, Martin, 1954. "A Method for Evaluating the Distribution of Power in a Committee System," American Political Science Review, Cambridge University Press, vol. 48(3), pages 787-792, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Leech, Dennis, 2001. "An Empirical Comparison of the Performance of Classical Power Indices," Economic Research Papers 269334, University of Warwick - Department of Economics.
    2. Leech, Dennis, 1999. "Minority Control: An Analysis of British Companies using Voting Power Indices," Economic Research Papers 269251, University of Warwick - Department of Economics.
    3. Crama, Yves & Leruth, Luc, 2007. "Control and voting power in corporate networks: Concepts and computational aspects," European Journal of Operational Research, Elsevier, vol. 178(3), pages 879-893, May.
    4. Edwards, Jeremy S.S. & Weichenrieder, Alfons J., 2009. "Control rights, pyramids, and the measurement of ownership concentration," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 489-508, October.
    5. Jeremy Edwards & Alfons J. Weichenrieder & Alfons Weichenrieder, 2004. "How Weak is the Weakest-Link Principle? On the Measurement of Firm Owners’ Control Rights," CESifo Working Paper Series 1255, CESifo.
    6. Leech, Dennis, 2002. "Shareholder Voting Power and Ownership Control of Companies," Economic Research Papers 269335, University of Warwick - Department of Economics.
    7. Sascha Kurz, 2016. "The inverse problem for power distributions in committees," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(1), pages 65-88, June.
    8. René Brink & Agnieszka Rusinowska & Frank Steffen, 2013. "Measuring power and satisfaction in societies with opinion leaders: an axiomatization," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(3), pages 671-683, September.
    9. Barua, Rana & Chakravarty, Satya R. & Roy, Sonali & Sarkar, Palash, 2004. "A characterization and some properties of the Banzhaf-Coleman-Dubey-Shapley sensitivity index," Games and Economic Behavior, Elsevier, vol. 49(1), pages 31-48, October.
    10. Crespi, R. & Renneboog, L.D.R., 2000. "United we stand : Corporate Monitoring by Shareholder Coalitions in the UK," Other publications TiSEM 226b4a58-7d8a-436c-8376-c, Tilburg University, School of Economics and Management.
    11. Pongou, Roland & Tchantcho, Bertrand & Tedjeugang, Narcisse, 2014. "Power theories for multi-choice organizations and political rules: Rank-order equivalence," Operations Research Perspectives, Elsevier, vol. 1(1), pages 42-49.
    12. Leech, Dennis, 2002. "Computation of Power Indices," The Warwick Economics Research Paper Series (TWERPS) 644, University of Warwick, Department of Economics.
    13. Taylan Mavruk & Conny Overland & Stefan Sjögren, 2020. "Keeping it real or keeping it simple? Ownership concentration measures compared," European Financial Management, European Financial Management Association, vol. 26(4), pages 958-1005, September.
    14. André Casajus & Helfried Labrenz & Tobias Hiller, 2009. "Majority shareholder protection by variable qualified majority rules," European Journal of Law and Economics, Springer, vol. 28(1), pages 9-18, August.
    15. René van den Brink & Agnieszka Rusinowska & Frank Steffen, 2009. "Measuring Power and Satisfaction in Societies with Opinion Leaders: Dictator and Opinion Leader Properties," Tinbergen Institute Discussion Papers 09-052/1, Tinbergen Institute.
    16. Nicodano, Giovanna & Sembenelli, Alessandro, 2004. "Private benefits, block transaction premiums and ownership structure," International Review of Financial Analysis, Elsevier, vol. 13(2), pages 227-244.
    17. Dennis Leech, 2013. "Power indices in large voting bodies," Public Choice, Springer, vol. 155(1), pages 61-79, April.
    18. Artyom Jelnov & Pavel Jelnov, 2019. "Success, Survival and Probabilistic Voting: The Case of a ruling Party," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 36(3), pages 209-226, December.
    19. Leech, D., 2000. "Computing Classical Power Indices For Large Finite Voting Games," The Warwick Economics Research Paper Series (TWERPS) 579, University of Warwick, Department of Economics.
    20. Annick Laruelle, 1999. "- On The Choice Of A Power Index," Working Papers. Serie AD 1999-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

    More about this item

    Keywords

    INDEXES ; GAMES ; VOTING ; SHAREHOLDERS;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:563. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Margaret Nash (email available below). General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.