Premiums for Voting Rights in the 2013-2016 Time Period

Document Type

Article

Publication Date

Fall 2017

Keywords

Stockholders, Voting Rights, Corporate governance, Business valuation

Abstract

Premiums for voting rights of common stock would logically exist in recognition of the fact that a voting privilege conveys a specific benefit compared to shares that either have no vote or that have diluted voting rights. In this article, voting shares are referred to as having “superior voting rights,” while non-voting or diluted voting rights are referred to as having “inferior voting rights.” Conceptually, the rate of return on a superior voting rights stock, other things equal, should be higher compared to shares that have inferior voting rights. Valuation analysts may apply a discount to shares with inferior voting rights compared to a preliminary valuation calculation for company voting shares. The intent of this article is to provide evidence on voting premiums as they currently exist in the US financial markets. The findings include mean voting stock premiums of 8.07% for 2013, 2.74% for 2014, −4.65% for 2015, and 2.70% for 2016.

Journal Title

Business Valuation Review

Volume

36

Issue

3

First Page

81

Last Page

84

DOI

https://doi.org/10.5791/BVR-D-16-0007.1

First Department

School of Business Administration

Link to Full Text

Share

COinS