Question

In: Finance

Should stock exchanges allow listing of shares with different voting rights? The length of the report...

Should stock exchanges allow listing of shares with different voting rights?

The length of the report should not exceed 2000 words excluding tables, appendixes and graphs (if any).

Solutions

Expert Solution

Companies with dual-class shares have two designations of common stock, typically A shares and B shares, with one class having more powerful voting rights than the other. Holding the more powerful shares allows some group of shareholders often the founders to control boardroom decisions even as economic interest in the firm is dispersed more widely. Some of the largest companies of recent times by market capitalization, such as Facebook, Alphabet, and Alibaba, carry dual class-shares.

Instead of recommending a total ban on listing of shares with different voting rights we recommend a more flexible shareholding structure. Companies with dual-class structures could be required, after a period of predetermined years, to gain approval from a majority of all shareholders to continue the dual-class structure. Furthermore, single-class firms should be given an option to convert to dual-class shares through a shareholder vote, in order to carry out significant transformations, instead of having to completely delist in order to achieve that goal.

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Should stock exchanges allow listing of shares with different voting rights? can you answer with the...
Should stock exchanges allow listing of shares with different voting rights? can you answer with the detailed explanations please?
why listing of shares with different voting rights will avoid profitable takeovers and differential voting shares...
why listing of shares with different voting rights will avoid profitable takeovers and differential voting shares cannot really promote long term investment but only short term investment. This share structure may encourage the entrenchment of the core shareholders
Aurora Corporation exchanges $700,000 of its voting stock for all of Theda Corporation’s single class of...
Aurora Corporation exchanges $700,000 of its voting stock for all of Theda Corporation’s single class of stock owned entirely by Kyle. Kyle’s basis in his Theda stock was $400,000. (1)   Does this exchange satisfy the requirements for a Type B reorganization? In your answer, discuss the requirements for a Type B reorganization and whether they are satisfied in this case. (2)   What gain, if any, do Aurora and Kyle recognize on the exchange? (3)   What is Kyle’s basis in his...
Some companies, such as Google, have created classes of stock with little or no voting rights...
Some companies, such as Google, have created classes of stock with little or no voting rights at all. Should this be allowed? Why would investors buy such stock? Explain in detail please.
2. Which of the following is a characteristic of preferred stock? Give voting rights to its...
2. Which of the following is a characteristic of preferred stock? Give voting rights to its owner. It is like annuity. Investors cannot force the payment of the dividend. Dividends are tax-deductible for the firm as opposed to interest payment. 3. Which of the following is NOT money market security?       A. Bankers acceptance       B. Treasury notes       C. Federal funds       D. Eurodollars and Eurodollar CD's 8. You purchased a share of stock for $50. Two years later...
On January 1, NewTune Company exchanges 17,360 shares of its common stock for all of the...
On January 1, NewTune Company exchanges 17,360 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune’s shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go’s fair value. NewTune also paid $44,650 in stock registration and issuance costs in connection with the merger. Several of On-the-Go’s accounts’ fair values differ from their book values on this...
On January 1, NewTune Company exchanges 17,496 shares of its common stock for all of the...
On January 1, NewTune Company exchanges 17,496 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune’s shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go’s fair value. NewTune also paid $31,250 in stock registration and issuance costs in connection with the merger. Several of On-the-Go’s accounts’ fair values differ from their book values on this...
On January 1, NewTune Company exchanges 18,688 shares of its common stock for all of the...
On January 1, NewTune Company exchanges 18,688 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune’s shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go’s fair value. NewTune also paid $35,250 in stock registration and issuance costs in connection with the merger. Several of On-the-Go’s accounts’ fair values differ from their book values on this...
On January 1, NewTune Company exchanges 18,688 shares of its common stock for all of the...
On January 1, NewTune Company exchanges 18,688 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune’s shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go’s fair value. NewTune also paid $35,250 in stock registration and issuance costs in connection with the merger. Several of On-the-Go’s accounts’ fair values differ from their book values on this...
On January 1, NewTune Company exchanges 19,336 shares of its common stock for all of the...
On January 1, NewTune Company exchanges 19,336 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune’s shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go’s fair value. NewTune also paid $45,450 in stock registration and issuance costs in connection with the merger. Several of On-the-Go’s accounts’ fair values differ from their book values on this...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT