Security-voting structure and equity financing in the banking sector: ‘one head-one vote’ versus ‘one share-one vote’ |
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Authors: | Ferretti Riccardo Pattitoni Pierpaolo Castelli Alex |
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Institution: | 1.Department of Communication and Economics, Cefin (Centro Studi Banca e Finanza), University of Modena and Reggio Emilia, Viale A. Allegri, 9, 42121, Reggio Emilia, Italy ;2.Department of Statistical Sciences “Paolo Fortunati”, University of Bologna, Via Belle Arti 41, 40126, Bologna, Italy ;3.Cefin (Centro Studi Banca e Finanza), Viale A. Allegri, 9, 42121, Reggio Emilia, Italy ;4.Henley Business School, Business Informatics, Systems and Accounting, University of Reading, Whiteknights, Reading, RG6 6UD, UK ; |
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Abstract: | Using a unique dataset including all rights issues of new shares and other equity-like securities announced by Italian listed banks between 1989 and 2014, and exploiting the ideal setting provided by the Italian Banking Law, which allows for listed co-operative banks, we test if the ‘one head-one vote’ principle of co-operative banks and the ‘one share-one vote’ voting system of joint stock banks imply different costs of equity. Our empirical results, obtained using an event-study methodology, regressions and matching estimators, support our research hypothesis that the one head-one vote principle makes it more difficult raising new capital compared to one share-one vote principle, and contribute to the literature on demutualization and cooperative hybrids. |
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