Voting Class Research Articles

Time-Variation of Dual-Class Premia

Dual class shares have been in existence in financial markets for more than one hundred years. One class of shares provides superior voting power, while the other class provides preferential access to economic benefits. Extant literature suggests that superior voting class shares should trade at premium over the economic shares. We revisit the dual-class share phenomenon and document the time-variation characteristics of the dual-class premium. We connect the premium to voting rights, liquidity and disproportional dividend privileges. We also document relationship between the dual-class premium and legal and institutional structures.

Abstract B36: Novel miRNAs as tissue-of-origin markers for distinguishing malignant pleural mesothelioma from lung adenocarcinoma

Abstract The outcome of patients with malignant pleural mesothelioma (MPM) is poor, and diagnosis is complicated by a lack of biomarkers capable of distinguishing primary MPM from cancers that have metastasized to the pleura. Clinical diagnosis and tissue of origin is currently assessed through the use of a panel of positive and negative markers; however, there remains a subset of cases that are not identifiable by current clinical biomarkers. Recent studies suggest that the human genome encodes more miRNAs than are currently annotated, and that the novel miRNAs may display enhanced tissue and lineage specificity. We conducted a de novo search for novel miRNAs by applying a prediction algorithm to the small RNA-sequence data in a cohort of MPM tumors (n=87) from The Cancer Genome Atlas (TCGA). This analysis yielded 424 predicted novel miRNA-like sequences, which were subsequently filtered by RNA structure, abundance, and genomic location to identify 154 previously unannotated miRNA sequences. This represents a significant increase to the repertoire of 1,597 annotated miRNAs in MPM. Protein-coding genes predicted to be targeted by these novel miRNAs, using the miRanda algorithm, include genes involved in MPM biology. One of the most highly expressed novel miRNAs identified targets the Ataxia Telangiectasia Mutated (ATM) gene. Another target gene, BRCA1 Associated Protein 1 (BAP1), is also in the DNA damage response pathway. To investigate the ability of these 154 novel miRNAs to distinguish MPM from other thoracic cancers, we assessed their expression in 1,093 lung tumors from four independent cohorts from TCGA and the BC Cancer Agency (BCCA): two adenocarcinoma (LUAD) cohorts (TCGA n=497, BCCA n=94) and two squamous cell carcinoma (LUSC) cohorts (TCGA n=467, BCCA n=35). Principal component analyses revealed that novel miRNA expression was able to unambiguously distinguish MPM from LUAD and LUSC. Furthermore, we developed an miRNA-based classifier model using the weighted voting class prediction method. A 10 novel miRNAs classifier was deduced by comparing MPM and LUAD cases from TCGA and validated by comparing MPM against LUAD cases from the BCCA cohort. Remarkably, this classifier successfully identified 86 out of the 87 MPM cases (98.8%) and 100% of LUAD cases (true positive rate = 98.85%, false positive rate = 1.15%). The strikingly high sensitivity and specificity in distinguishing MPM from LUAD illustrates the potential of using novel miRNAs to supplement current clinical markers to define MPM. Citation Format: Erin A. Marshall, Christine Anderson, Kevin W. Ng, Brenda C. Minatel, Katey S.S. Enfield, Adam P. Sage, Zhaolin Xu, Wan L. Lam, Victor D. Martinez. Novel miRNAs as tissue-of-origin markers for distinguishing malignant pleural mesothelioma from lung adenocarcinoma [abstract]. In: Proceedings of the Fifth AACR-IASLC International Joint Conference: Lung Cancer Translational Science from the Bench to the Clinic; Jan 8-11, 2018; San Diego, CA. Philadelphia (PA): AACR; Clin Cancer Res 2018;24(17_Suppl):Abstract nr B36.

MicroRNA Profiles in Parkinson's Disease Prefrontal Cortex.

Objective: The goal of this study was to compare the microRNA (miRNA) profile of Parkinson's disease (PD) frontal cortex with normal control brain, allowing for the identification of PD specific signatures as well as study the disease-related phenotypes of onset age and dementia.Methods: Small RNA sequence analysis was performed from prefrontal cortex for 29 PD samples and 33 control samples. After sample QC, normalization and batch correction, linear regression was employed to identify miRNAs altered in PD, and a PD classifier was developed using weighted voting class prediction. The relationship of miRNA levels to onset age and PD with dementia (PDD) was also characterized in case-only analyses.Results: One twenty five miRNAs were differentially expressed in PD at a genome-wide level of significance (FDR q < 0.05). A set of 29 miRNAs classified PD from non-diseased brain (93.9% specificity, 96.6% sensitivity). The majority of differentially expressed miRNAs (105/125) showed an ordinal relationship from control, to PD without dementia (PDN), to PDD. Among PD brains, 36 miRNAs classified PDD from PDN (sensitivity = 81.2%, specificity = 88.9%). Among differentially expressed miRNAs, miR-10b-5p had a positive association with onset age (q = 4.7e-2).Conclusions: Based on cortical miRNA levels, PD brains were accurately classified from non-diseased brains. Additionally, the PDD miRNA profile exhibited a more severe pattern of alteration among those differentially expressed in PD. To evaluate the clinical utility of miRNAs as potential clinical biomarkers, further characterization and testing of brain-related miRNA alterations in peripheral biofluids is warranted.

Earnings announcements, trading volume, and price discovery: evidence from dual class firms

This paper investigates price discovery between control shares (the superior voting class) and public shares (the inferior voting class) issued by 62 dual-class firms around 148 quarterly earnings announcements from January 2002 to June 2008. We document substantial informed trading in both control and public shares. The average price discovery of control shares is 46.6 % for positive events and 40.5 % for negative events during the event periods. In addition, before the earnings announcements, abnormal trading volume and price discovery increase significantly in control shares relative to public shares. We find price discovery of control shares increases with relative volume of control shares to public shares and relative bid-ask spread but decreases with relative institutional ownership and relative volatility. Our results suggest that publicly traded superior voting class contributes to price discovery substantially, especially before earnings announcements when the information asymmetry is high. The listing of control shares not only enhances price efficiency, but also provides opportunities for outside sophisticated investors to get voting rights and engage in monitoring. Our study sheds new light on the issues of price discovery and corporate governance of dual-class firms.

Self‐Expropriation versus Self‐Interest in Dual‐Class Voting: The Pirelli Case Study

Called to vote for a reduction in their dividend privileges, Pirelli's nonvoting shareholders appeared to expropriate themselves and favor the voting class of shares. However, what initially seemed to be self‐expropriation became self‐interest when the media coverage, voting decisions, and dual‐class ownership of 36,361 shareholders were investigated. Most of the institutional investors voting “for” the proposal were found to have ownership ties with controlling shareholders or to have held voting shares. Moreover, dual‐class ownership significantly increased the likelihood of shareholders voting to expropriate one class of shares if they benefited from the other class in their portfolios.

Corporate governance mechanisms and the performance of small-cap firms in Canada

Identifying corporate governance mechanisms to improve firm performance has been at the forefront of policy discussion and research in recent years. Existing research in this area focuses on large-capitalisation firms, and has not provided much insight on smaller firms. This paper tests for the optimality of deployment of governance mechanisms for Canadian small-cap firms by estimating a simultaneous equation system that links four control mechanisms to firm performance, using recent data. The results confirm simultaneity between several governance mechanisms and Canadian small-cap firm performance. CEO ownership and shareholder rights are shown to determine board independence. CEO ownership in turn is shown to depend on the extent of shareholder rights and whether the CEO is also Chairperson of the board. Canadian small-cap firms appear to overutilise debt as a control mechanism. There is somewhat weaker evidence that board independence and CEO ownership are beyond the optimum. The latter, given the relatively high degree of CEO ownership in Canadian small-cap firms, is consistent with management entrenchment. We also do not find any significant discount to performance for Quebec-based firms, or for firms with dual or multiple voting class shares structures.

U.S. Cross-Listings and the Private Benefits of Control: Evidence from Dual Class Shares

Non-U.S. firms that cross-list on U.S. exchanges have voting premiums that are on average 43% lower than other non-U.S. firms that do not cross-list. Using a panel data set comprised of 745 firms that have dual class shares, this paper shows that the difference in voting premiums is statistically significant after controlling for firm and country level characteristics and that this result is robust to alternative benchmarks and methodologies. Further, it finds that the difference in voting premiums is larger for firms from countries that provide poor protection to minority investors. An event study shows that, on average, both the high and low voting share classes benefit when firms announce they will cross-list in the U.S. However, the low voting class benefits by a larger amount, which leads to the decrease in the voting premium. Overall, the evidence supports the bonding hypothesis: cross-listing in the U.S. improves the protection afforded to minority investors and decreases the private benefits of control.

Market Efficiency in the Valuation of Corporate Control: Evidence from Dual Class Equity

AbstractThe existence of two classes of equity differing principally in their voting rights allows tests of hypotheses of corporate governance and security valuation. A legal case involving the voting and non‐voting shares of Canadian Tire affected the relative prices of dual class equity for other firms listed on the Toronto Stock Exchange. Some price changes are consistent with the theory advanced by Levy (1983) that price differences are related to expected takeover premiums. Other observations are difficult to reconcile with the efficient markets hypothesis. The evidence is consistent with the market requiring a significant time period to assess and incorporate into prices the information contained in a series of complex events.RésuméAu Canada, il existe plusieurs paires d'actions ordinaires enregistrées avec droit de vote et d'actions ordinaires en‐registrées avec droit de vote restreint ou sans droit de vote, émises par la même corporation, qui permettent de vérifier des hypothèses sur la direction des compagnies et sur la valeur des actions. Le casjuridique de Canadian Tire, au sujet des actions avec droit de vote et sans droit de vote, a changé les cours du marché des actions d'autres compagnies avec les actions pareilles enregistrées. Quelques changements de prix se rencontrent à l'hypothèse de Levy (1983), qui dit que la prime espérée d'acquisition cause la différence de la valeur relative des actions avec droit de vote et sans droit de vote. d'autres changements ne se rencontrent pas à l'hypothèse des marchés efficients. La démonstration montre que les cours du marché changent plus lentement lorsque le marché des capitaux doit évaluer l'information dans une série d'événements compliquées.

Literacy and the Electorate

Expansion and Contraction of the Franchise. Between the theory and practice of the American Revolution there was a wide breach. The ruling caste of property owners retained control in spite of the legendary democratization of that era. Jefferson's declaration of the equality of man was not fully applied to suffrage requirements until the time of Andrew Jackson. Since then, suffrage restrictions of property, color, and sex have suffered the fate of houses built upon sand. The floods of democracy have now smitten upon these limitations for more than a century. In the rise of the common man, both the property-owning and taxpaying qualifications for voters disappeared even in the original commonwealths. Once these restrictions which separated the old aristocracy from the new proletariat had been vanquished, the requisites of color and sex were likewise abandoned.With few exceptions, suffrage had been granted to practically all adult male white citizens before the Civil War. Yet counter-attacks were waged by the advocates of a limited electorate. The theory prevails that a steady swing toward universal suffrage characterizes the American franchise. The pendulum has also swung in the opposite direction. Connecticut and Massachusetts, where the reaction against suffrage extension was rapid, were the first states to retrench on the policy of adult male white suffrage. In place of property qualifications, literacy restrictions appeared. The purpose of these restrictions set up by Connecticut in 1855 and Massachusetts in 1857 was to bar the ignorant immigrants from the voting class.