Journal of Financial Economics Vol. 20 1988
One share-one vote and the market for corporate control
Abstract
This paper analyzes the optimality of the one share-one vote rule. We focus on takeover bids as a mechanism for allocating control. We assume two types of control benefits — benefits to security holders and private benefits to the controlling party. One share-one vote maximizes the importance of benefits to securityholders relative to benefits to the controlling party and hence encourages the selection of an efficient management team. However, one share-one vote does not always maximize the reward to securityholders in a corporate control contest. Sufficient conditions are given for one share-one vote to be optimal overall. The paper also includes a discussion of the empirical evidence.
- DOI
- 10.1016/0304-405x(88)90044-x
- Volume
- 20
- Pages
- 175-202
- Language
- en
- Sources
- crossref bibtex:phds-export.bib openalex