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  1. The perils of small-minority controllers
    Autor*in: Bebchuk, Lucian A.; Kastiel, Kobi
    Erschienen: 2018
    Verlag:  Harvard Law School, Cambridge, MA

    This Article contributes to the long-standing and heated debate over dual-class companies by placing a spotlight on a significant set of dual-class companies whose structures raise especially severe governance concerns: those with controllers holding... mehr

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    Standort:
    Helmut-Schmidt-Universität, Universität der Bundeswehr Hamburg, Universitätsbibliothek
    Fernleihe:
    keine Fernleihe

    Standort:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Fernleihe:
    keine Fernleihe

     

    This Article contributes to the long-standing and heated debate over dual-class companies by placing a spotlight on a significant set of dual-class companies whose structures raise especially severe governance concerns: those with controllers holding a small minority of the company's equity capital. Such small-minority controllers dominate some of the country's largest companies, and we show that their numbers can be expected to grow. We begin by analyzing the perils of small-minority controllers, explaining how they generate considerable governance costs and risks and showing how these costs can be expected to escalate as the controller's stake decreases. We then identify the mechanisms that enable such controllers to retain their power despite holding a small or even a tiny minority of the company's equity capital. Using a hand-collected analysis of governance documents of these companies, we present novel empirical evidence of the current incidence and potential growth of small-minority and tiny-minority controllers. Among other things, we show that governance arrangements at a substantial majority of dual-class companies enable the controllers to reduce their equity stake to below 10% and still retain a lock on control, and that a sizable fraction of such companies enable retaining control with less than a 5% stake. Finally, we examine the considerable policy implications that arise from recognizing the perils of small-minority controllers. We first discuss disclosures necessary to make transparent to investors the extent to which arrangements enable controllers to reduce their stake without forgoing control. We then identify and examine measures that public officials or institutional investors could take to ensure that controllers maintain a minimum fraction of equity capital; to provide public investors with extra protections in the presence of small-minority controllers; or to screen midstream changes that can introduce or increase the costs of small-minority controllers

     
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    Quelle: Verbundkataloge
    Sprache: Englisch
    Medientyp: Buch (Monographie)
    Format: Online
    Weitere Identifier:
    Auflage/Ausgabe: Last revised: December 2018
    Schriftenreihe: Discussion paper / Harvard John M. Olin Center for Law, Economics, and Business ; no. 985 (12/2018)
    Schlagworte: Corporate governance; agency problems; dual-class; controllingshareholders; small-minority controllers; tiny-minority controllers; wedge,nonvoting stock; IPO
    Umfang: 1 Online-Ressource (circa 61 Seiten)
    Bemerkung(en):

    Forthcoming in Georgetown Law Journal (2019)
  2. The untenable case for perpetual dual-class stock
    Autor*in: Bebchuk, Lucian A.; Kastiel, Kobi
    Erschienen: 04/2017
    Verlag:  Harvard Law School, Cambridge, MA

    The desirability of a dual-class structure, which enables founders of public companies to retain a lock on control while holding a minority of the company's equity capital, has long been the subject of a heated debate. This debate has focused on... mehr

    Zugang:
    Resolving-System (kostenfrei)

    Standort:
    Helmut-Schmidt-Universität, Universität der Bundeswehr Hamburg, Universitätsbibliothek
    Fernleihe:
    keine Fernleihe

    Standort:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Fernleihe:
    keine Fernleihe

     

    The desirability of a dual-class structure, which enables founders of public companies to retain a lock on control while holding a minority of the company's equity capital, has long been the subject of a heated debate. This debate has focused on whether dual-class stock is an efficient capital structure that should be permitted at the time of initial public offering (“IPO”). By contrast, we focus on how the passage of time since the IPO can be expected to affect the efficiency of such a structure.Our analysis demonstrates that the potential advantages of dual-class structures (such as those resulting from founders' superior leadership skills) tend to recede, and the potential costs tend to rise, as time passes from the IPO. Furthermore, we show that controllers have perverse incentives to retain dual-class structures even when those structures become inefficient over time. Accordingly, even those who believe that dual-class structures are in many cases efficient at the time of the IPO should recognize the substantial risk that their efficiency may decline and disappear over time. Going forward, the debate should focus on the permissibility of finite-term dual-class structures — that is, structures that sunset after a fixed period of time (such as ten or fifteen years) unless their extension is approved by shareholders unaffiliated with the controller.We provide a framework for designing dual-class sunsets and address potential objections to their use. We also discuss the significant implications of our analysis for public officials, institutional investors, and researchers

     
    Export in Literaturverwaltung   RIS-Format
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    Hinweise zum Inhalt
    Volltext (kostenfrei)
    Quelle: Verbundkataloge
    Sprache: Englisch
    Medientyp: Buch (Monographie)
    Format: Online
    Weitere Identifier:
    Schriftenreihe: Discussion paper / Harvard John M. Olin Center for Law, Economics, and Business ; no. 905
    Schlagworte: corporations; dual-class; controlling shareholders; corporategovernance; agency costs; sunset
    Umfang: 1 Online-Ressource (circa 50 Seiten)
    Bemerkung(en):

    This paper is also Discussion Paper 2017-6 of the Harvard Law School Program on Corporate Governance