Big Changes in Ownership Structures - Multiple Voting Shares in Interwar in France

Abstract

During the 1920s, the phenomenon of multiple voting shares expanded all over France and the world. This contributed significantly to the separation of ownership and control emphasized by Berle and Means (1932), and very much discussed by the foreign contemporaries. As it the case today, some argued that the reinforcement of the power of majority shareholders facilitated their firms' development, while others emphasized the high costs that might result from managers' and major shareholders' absolute control. In this paper, we present detailed data on the development of multiple voting shares in France in the 1920s. We reword the arguments of the authors writing during the interwar period by using an interpretative framework of recent concepts in corporate finance and corporate governance. We test two alternative views from your data on the Stock Market performances: the agency view in which the concentration of control did not affect the performances of firms issuing multiple voting share and the timing view, in which the issuing of these shares was favoured by the long bull market of the 1920s.