Investor Protection and Share Prices: Evidence from Statutory Rules Governing Variations of Shareholders‘ Class Rights in Russia
نویسنده
چکیده
This paper uses a quasi-experimental framework provided by recent changes in Russian corporate law to study the effect of investor protection on the value of shares. The legal change analyzed involves the empowerment of preferred (non-voting) shareholders to veto unfavorable changes in their class rights. Based on a novel hand-collected dataset of dual class stock companies in Russia and using the difference-in-difference estimator, the study finds a statistically and economically significant effect of improved protection of preferred shareholders on the value of their shares. The result is robust to several changes in the empirical specification. JEL classification: G30, G38, K22.
منابع مشابه
Investor Protection and Asset Pricing∗
Corporations in most countries are run by controlling shareholders, who have substantially smaller cash flow rights than their control rights in the firm. This separation of ownership and control allows the controlling shareholders to pursue private benefits at the cost of outside minority investors by diverting resources away from the firm and distorting corporate investment and payout policie...
متن کاملTo Study The Effect of Investor Protection on Future Stock Price Crash Risk
Managers are responsible for providing financial statements and they might try to make a good picture of their firm's conditions. Therefore, they try to delay the disclosure of bad news and release the good news as soon as possible. The ten-dency of managers toward hiding bad news increases the stock price crash risk. The protection of investor is one of the factors that can prevent from fallin...
متن کاملDo firms in countries with poor protection of investor rights hold more cash?
Aaron Kravitz, for their help with the data collection. We are grateful to Ole-Kristian Hope, Jan Mahrt-Smith, and seminar participants at the University of Toronto for useful comments. Abstract Managers make different decisions in countries with poor protection of investor rights and poor financial development. One possible explanation is that shareholder-wealth maximizing managers face differ...
متن کاملDual-Class Premium, Corporate Governance, and the Mandatory Bid Rule: Evidence from the Brazilian Stock Market
This paper conducts a systematic analysis of the determinants of the relative price difference between voting and non-voting shares (“dual-class premium”) within the context of a mandatory bid rule. This rule implies that the acquirer of a control block is also obliged to offer minority shareholders the same (or partially the same) price for their shares. In the presence of the rule, the dual-c...
متن کاملPrivate Benefits of Control, Growth Opportunities and Investor Protection*
We develop a model to illustrate that controlling shareholders choose the level of investor protection that maximizes their own interests. Controlling shareholders in companies with complicated control structures can easily extract private benefits and are thus reluctant to enhance investor protection which would necessitate increased transparency. In contrast, controlling shareholders in compa...
متن کامل