{"title":"European Corporate Governance: Trading Off Liquidity Against Control","authors":"Marco Becht","doi":"10.2139/ssrn.160588","DOIUrl":null,"url":null,"abstract":"Ownership dispersion is a pre-requisite for liquid stock markets, but it entails a collective action problem: individual investors have no incentives to engage in direct monitoring. Legal devices can provide solutions along three dimensions. One, they can concentrate or dilute voting power. Two, they can affect liquidity. Three, they can give the right or wrong monitoring incentives. This paper shows how these devices are used and how they can depress liquidity. Legal constraints aimed at strengthening minority protection can reduce the scope for monitoring, destroy liquidity and even create incentives for minority abuse: for example one-share-one-vote restrictions can encourage the formation of pyramidal holding companies. The search for solutions that concentrate voting power, provide liquidity and protect minorities continues.","PeriodicalId":47357,"journal":{"name":"Corporate Communications","volume":"1 1","pages":""},"PeriodicalIF":2.8000,"publicationDate":"1999-05-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"121","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Corporate Communications","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.160588","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 121
Abstract
Ownership dispersion is a pre-requisite for liquid stock markets, but it entails a collective action problem: individual investors have no incentives to engage in direct monitoring. Legal devices can provide solutions along three dimensions. One, they can concentrate or dilute voting power. Two, they can affect liquidity. Three, they can give the right or wrong monitoring incentives. This paper shows how these devices are used and how they can depress liquidity. Legal constraints aimed at strengthening minority protection can reduce the scope for monitoring, destroy liquidity and even create incentives for minority abuse: for example one-share-one-vote restrictions can encourage the formation of pyramidal holding companies. The search for solutions that concentrate voting power, provide liquidity and protect minorities continues.
期刊介绍：
Corporate Communications: An International Journal addresses the issues arising from the increased awareness that an organisation''s communications are part of the whole organisation, and that the relationship an organisation has with its external public requires careful management. The responsibility for communications is increasingly being seen as part of every employee''s role and not simply the function of the marketing/PR departments. This journal will illustrate why communications are important and how best to implement a strategic communications plan.
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