Ownership of dual class shares and passive investment strategies
Document Type
Article
Publication Date
1-1-2008
Abstract
Previous studies of firms with two classes of stock find a price premium for the class with superior voting rights over the restricted voting rights shares. This premium changes over time and is related to the likelihood of a contested takeover attempt. These findings have implications for both passive and active investors. We find that for passive, buy-and-hold investors, restricted voting shares dominate superior voting shares in mean-variance space. This relationship also holds for a four factor model specification of stock returns. Our evidence indicates that passive, buy-and-hold investors can achieve a higher return with restricted vote shares than superior vote shares with no increase in either standalone or portfolio risk.
Recommended Citation
Marquette, Christopher J. and Williams, Thomas G.E., "Ownership of dual class shares and passive investment strategies" (2008). College of Business and Economics. 349.
https://digitalcommons.uncfsu.edu/college_business_economics/349