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Trading and Shareholder Democracy
Levit, Doron
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Malenko, Nadya
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Maug, Ernst
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URL:
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http://ssrn.com/abstract_id=3463129
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Document Type:
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Working paper
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Year of publication:
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2019
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The title of a journal, publication series:
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ECGI Working Paper Series in Finance
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Volume:
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631/2019
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Place of publication:
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Brussels
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Publishing house:
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European Corporate Governance Institute (ECGI)
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Edition:
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Last revised: 27 Jan 2021
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Publication language:
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English
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Institution:
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Business School > ABWL u. Corporate Finance (Maug 2006-)
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Subject:
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330 Economics
650 Management
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Classification:
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JEL:
D74 , D3 , G34 , K22,
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Keywords (English):
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Corporate Governance , Voting , Shareholder Rights , Trading , Delegation
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Abstract:
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We study shareholder voting in a model in which trading aspects the composition of the shareholder base. Trading and voting are complementary, which gives rise to self-fulfilling expectations about proposal acceptance and multiple equilibria. Prices and shareholder welfare can move in opposite directions, so the former may be an invalid proxy for the latter. Increasing liquidity can reduce welfare, because it allows extreme shareholders to gain more weight in voting. Delegating decision-making to the board can improve shareholder value. However, the optimal board is biased, does not represent current shareholders, and may not garner support from the majority of shareholders.
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 | Dieser Eintrag ist Teil der Universitätsbibliographie. |
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