Trading and Shareholder Democracy


Levit, Doron ; Malenko, Nadya ; Maug, Ernst



URL: http://ssrn.com/abstract_id=3463129
Document Type: Working paper
Year of publication: 2019
The title of a journal, publication series: ECGI Working Paper Series in Finance
Volume: 631/2019
Place of publication: Brussels
Publishing house: European Corporate Governance Institute (ECGI)
Edition: Last revised: 27 Jan 2021
Publication language: English
Institution: Business School > ABWL u. Corporate Finance (Maug)
Subject: 330 Economics
650 Management
Classification: JEL: D74 , D3 , G34 , K22,
Keywords (English): Corporate Governance , Voting , Shareholder Rights , Trading , Delegation
Abstract: 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.

Dieser Eintrag ist Teil der Universitätsbibliographie.




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