Corporate Governance of European Issuers Adopting Multiple Voting Shares: Evidence from The Market

Abstract

Academic literature has usually considered desirable to grant shareholders voting rights proportionally to their ownership in the invested entity, since the alignment of economic interest with voting power encourages blockholders to take decisions in the interests of all shareholders. In fact, this is likely to maximize company’s ability to create value over the short, medium and long run. However, in recent years, European issuers seem to be more prone than ever to operate capital systems enabling disproportionate voting mechanisms, so that to, when legally provided, ensure certain shareholders control with less than proportional economic interest. After reviewing the academic literature on the one share – one vote principle and the relevant regulatory frameworks in European countries, we portray an updated picture of major corporate governance features at European listed companies adopting multiple voting shares. Our study further analyzes whether and how the institutional context where a company operates influences its governance and performance.