Photo from wikipedia
A change in the index selection rules of Deutsche Borse provides a unique opportunity to investigate the drivers behind the decision to abolish dual-class shares. As of June 2002, selection… Click to show full abstract
A change in the index selection rules of Deutsche Borse provides a unique opportunity to investigate the drivers behind the decision to abolish dual-class shares. As of June 2002, selection is based on the market capitalization of the free-float of the more liquid share class rather than the overall market capitalization. Hence, firms have had to reassess the benefits from their dual-class shares by weighing them against the cost from foregone index weight associated with having two share classes. Our findings suggest that index membership significantly affects the controlling shareholder’s motivation to unify preferred and common stock.
Journal Title: Journal of International Financial Markets, Institutions and Money
Year Published: 2017
Link to full text (if available)
Share on Social Media: Sign Up to like & get
recommendations!