Review of Financial Studies Vol. 23 No. 3 2010
Extreme Governance: An Analysis of Dual-Class Firms in the United States
Abstract
[We construct a comprehensive list of dual-class firms in the United States and use this list to analyze the relationship between insider ownership and firm value. Our data have two useful features. First, since dual-class stock separates cash-flow rights from voting rights, we can separately identify the impact of each. Second, we address endogeneity concerns by using exogenous predictors of dual-class status as instruments. In single-stage regressions, we find strong evidence that firm value is increasing in insiders' cash-flow rights and decreasing in insider voting rights. In instrumental variable regressions, the point estimates are similar but the significance levels are lower.]
- Volume
- 23
- Issue
- 3
- Pages
- 1051-1088
- Sources
- bibtex:phds-export.bib