managementchanginginthisfirmisπ.Sincethenonvoting
shareshaveabsolutelynosayinwhetherthemanagementcan
be changed, the value per nonvoting share will be based
purely upon the status quo value:
Thevotingshareswilltradeata premiumthatreflects the
expected value of control:
Thepremiumonvotingsharesshouldthereforebeafunction
oftheprobabilitythattherewillbeachangeinmanagement
atthatfirm(π)andthevalueofchangingmanagement(Va−
Vb).
Totheextentthatnonvotingshareholdersareprotectedorcan
extractsomeoftheexpectedvalueofcontrol,thedifference
between voting and nonvoting shares will be lower. It is
possible,forinstance,fornonvotingsharestogainsome of
the value of control if it is accomplished by changing
managers,ratherthanbyahostiletakeover.Inthatcase,the
value of the firm will increase and all shareholders will
benefit.
Thereisonespecialcategoryofvotingsharescalledgolden
sharesthatwesometimesseeingovernment-ownedfirmsthat
have been privatized. These shares are retained by the
government after the privatizationand essentiallygive the
government vetopower over majordecisions madeby the
firm.Ineffect,theyallowthegovernmenttoretainsomeora