smallestinwell-managedfirmsandinfirmswherethevoting
shares are concentrated in the hands of insiders and
management.
Empirical Evidence
ShareswithdifferentvotingrightsareunusualintheUnited
States, especially among larger market capitalization
companies.Notwithstandingthisfact,theearlieststudies of
voting share premiums were done with companies with
different votingshare classes in the United States. Lease,
McConnell,andMikkelson(1983)findthatvotingsharesin
thatmarkettrade,onaverage,atarelativelysmallpremiumof
5 to 10 percent over nonvoting shares.
53 Theyalsofind extendedperiodswhere thevotingshare
premiumdisappearedorvotingsharestradedatadiscountto
nonvotingshares,asurprisingfindingthatcanbeexplained
partiallybytherelativeilliquidityofvotingshares(sinceonly
asmallpercentageisavailableforpublictrading).Thesmall
premium commanded by voting shares was confirmed by
Zingales in a study in 1995.
54 Studies in recent years haveexpanded the analysis of
votingshare premiumsto othermarkets,where differential
votingrights aremorecommon.Premiumsofa magnitude
similartothosefoundintheUnitedStates(5to 10 percent)
werefoundintheUnitedKingdomandCanada.Muchlarger
premiumsarereportedinLatinAmerica(50to 100 percent),
Israel(75percent),andItaly(80percent).Inacomparative
study of voting premiums across 661 companies in 18
countries, Nenova (2000) concludes that the legal
environment was the key factor in explaining differences
acrosscountries and thatthevotingpremium issmaller in
countries with better legal protection for minority and