Abstract
Abstract The value of a right should not be lower than zero. The present paper overcomes some possible measurement errors and proposes a new measure of the voting right, the Relative Vote Segment, which incorporates dividend privileges into the inferior class of shares, when granted. Results from Italian non-voting shares listed in the 1999-2008 period show that our more accurate measure reports an average voting right equal to +45.58%, while the standard relative price difference and the Nenova (2003) measure greatly underestimate its value and report average values equal to +20.35% and +1.30%, respectively. Our methodology reports almost no negative values, while traditional measures report almost 25% of negative values. Though a more correct measure of the voting right is essential to estimate its average value and make unbiased cross-country comparisons, the determinants of the voting rights are also well captured by the relative price difference, once the dividend yield differences are controlled for.Keywords: non-voting shares; voting premium; dual-class share firms; Italy JEL Classifications: G34
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