Price Differences between Equity Classes: Corporate Control, Foreign Ownership or Liquidity?

28 Pages Posted: 16 Jun 2006

Date Written: June 2006

Abstract

This paper is the first comprehensive study of price differences for dual class equity at the Oslo Stock Exchange. It analyzes the relative importance of corporate control, foreign ownership restrictions and stock market liquidity for the price differences. The Norwegian market has the peculiar feature that in part of the sample period nonvoting shares were trading at a premium to voting shares, i.e., what is usually termed the "voting premium" was negative. This result can be rationalized by restrictions on foreign ownership. In the later part of the period, with no regulatory restrictions on foreign ownership, the voting premium is positive, and related to corporate governance and liquidity.

Keywords: Dual class equity, Corporate governance, Foreign ownership restrictions, Stock market liquidity, Norway

JEL Classification: G10, G30

Suggested Citation

Ødegaard, Bernt Arne, Price Differences between Equity Classes: Corporate Control, Foreign Ownership or Liquidity? (June 2006). Available at SSRN: https://ssrn.com/abstract=908859 or http://dx.doi.org/10.2139/ssrn.908859

Bernt Arne Ødegaard (Contact Author)

University of Stavanger ( email )

UiS Business School
Stavanger, NO-4036
Norway

HOME PAGE: http://ba-odegaard.no

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