Note on Measuring Controlling Shareholders’ Ownership, Voting, and Control Rights

Case Solution

Belen Villalonga
Harvard Business School ()

Founders and their families can raise capital without giving up control of their businesses through the use of mechanisms such as two-tier shares, pyramid ownership, voting arrangements, and disproportionate representation on the board. The use of these mechanisms in public companies is widespread worldwide and in the United States. It is important to understand how the various mechanisms contribute to the separation between beneficial owner and control, because the choice between these mechanisms affects the value of the company. For reasons of transparency and investor protection, it is also important for the minority shareholders of these companies and for the supervisory authorities.

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