Purpose: It is widely believed that deviating from the "one share-one vote" principle leads to corporate inefficiencies. To measure the market appraisal of this potential inefficiency, this study aims to analyse the market reaction to a change from the "one head-one vote" to the "one share-one vote" mechanism by means of a quasi-natural experiment: a 2015 Italian reform forcing all listed cooperative banks to transform into joint-stock companies. Design/methodology/approach: To investigate the market reaction around the regulatory change, this study uses both a traditional event study and a novel methodology based on the synthetic control method as well as on Bayesian statistical techniques. Findings: This study estimates the market valuation of the effects of the governance change around the event date being equal to a cumulative average increase in market value of about 14 per cent using an event study methodology, and of about 13 per cent using Bayesian techniques. Originality/value: This study provides evidence on the fact that the voting mechanism significantly affects the market values of companies. The study also introduces a novel statistical technique that can be extremely useful in analysing single-firm event studies.

The value of voting rights in Italian cooperative banks: a quasi-natural experiment

Botta, Marco
;
2020-01-01

Abstract

Purpose: It is widely believed that deviating from the "one share-one vote" principle leads to corporate inefficiencies. To measure the market appraisal of this potential inefficiency, this study aims to analyse the market reaction to a change from the "one head-one vote" to the "one share-one vote" mechanism by means of a quasi-natural experiment: a 2015 Italian reform forcing all listed cooperative banks to transform into joint-stock companies. Design/methodology/approach: To investigate the market reaction around the regulatory change, this study uses both a traditional event study and a novel methodology based on the synthetic control method as well as on Bayesian statistical techniques. Findings: This study estimates the market valuation of the effects of the governance change around the event date being equal to a cumulative average increase in market value of about 14 per cent using an event study methodology, and of about 13 per cent using Bayesian techniques. Originality/value: This study provides evidence on the fact that the voting mechanism significantly affects the market values of companies. The study also introduces a novel statistical technique that can be extremely useful in analysing single-firm event studies.
2020
https://www.emerald.com/insight/content/doi/10.1108/MF-07-2019-0341/full/html
Corporate governance; Corporate voting; Bank regulation; Voting premium
Botta, Marco; Colombo, Luca Vittorio Angelo
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11383/2094544
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