Abstract
Since the new Swiss Stock Corporation Law came into effect in 1992, most listed Swiss companies have reduced the number of share classes outstanding by exchanging some classes for an already existing one. Overall, the simplifications have had no significant influence on market capitalisation. However, this can be explained by two compensating effects. Firstly, holders of nonvoting participation certificates (PC) achieve considerable gains, whereas the larger group of shareholders suffer minor losses. Secondly, the change in market value is dependent on the change in the bid-ask spread. The more liquidity is improved, the more share prices increase. For the in-crease in market capitalisation to be statistically significant, the reduction in the bid-ask spread must be not only statistically significant but also reach around 0.5 percentage points.
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