One Share - One Vote: The Theory
Review of Finance, Forthcoming
Posted: 11 Mar 2008
The theoretical literature on security-voting structure can be organized around three questions: What impact do non-voting shares have on takeover outcomes? How does disproportional voting power affect the incentives of blockholders? What are the repercussions of mandating one share - one vote for firms' financing and ownership choices? Overall, the costs and benefits of separating cash flow and votes reflect the fundamental governance trade-off between disempowering blockholders and empowering managers. It is therefore an open question whether mandating one share - one vote would improve the quality of corporate governance, notably in systems that so far relied on active owners.
Keywords: Security-Voting Structure, Market for Corporate Control, Controlling Minority Shareholders
JEL Classification: G32
Suggested Citation: Suggested Citation