Encouraging long-term shareholders: The effects of loyalty shares with double voting rights
Belot, François; Ginglinger, Edith; Starks, Laura (2019), Encouraging long-term shareholders: The effects of loyalty shares with double voting rights, 9th Financial Engineering and Banking Society international Conference, 2019-05, Prague, Czech Republic
TypeCommunication / Conférence
Conference title9th Financial Engineering and Banking Society international Conference
Conference countryCzech Republic
MetadataShow full item record
Théorie économique, modélisation et applications [THEMA]
Dauphine Recherches en Management [DRM]
University of Texas
Abstract (EN)The 2014 passage of the Florange Act in France changed an opt-in provision for loyalty shares (allocating a second voting right for shares held at least two years) to an opt-out provision with shareholder approval. We find that before 2014, loyalty shares were popular among small family firms. Following the Act, firms with a one share – one vote structure that announced they would opt out of the law incurred a negative market reaction, suggesting that shareholders have a positive perception of loyalty shares. It appears that by encouraging costly monitoring by long-term shareholders, loyalty shares can benefit all shareholders.
Subjects / KeywordsShareholder vote; Institutional Ownership; Corporate Governance Regulation
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