Common stock with limited voting rights changes managerial incentives by allowing managers to separate ownership of equity from ownership of votes. This study compares managerial ownership before and after the creation of a class of limited voting common stock by 44 publicly traded firms between 1962 and 1984, and examines whether the event affects the wealth of current shareholders. There is no evidence that current shareholders are harmed by the creation of limited voting common stock.

In this paper we examine the Henriksson-Merton test of market timing and its potential usefulness in evaluating investment advice. The paper proposes a natural extension of the test that is valid under more general assumptions about the distribution of asset returns. We show that the Henriksson-Merton test and its more general counterpart are special cases of standard tests of market rationality and efficiency. Both tests are applied to a group of foreign exchange advisory services.