Encumbered Shares

자료: http://law.bepress.com/cgi/viewcontent.cgi?article=1031&context=sandiegolwps

지은이: Shaun Martin and Frank Partnoy,

University of San Diego School of Law

This working paper is hosted by The Berkeley Electronic Press (bepress) and may not be commercially reproduced without the permission of the copyright holder.

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Abstract:

The fundamental assumptions in the law and economics literature about shareholder

voting and the one-share/one-vote rule are flawed. The classic view is that

share ownership is necessary and sufficient to create voting rights and that such

rights should be directly proportional to share ownership. We demonstrate that

this assumption is unfounded, both for shares that are “economically encumbered”

(held by shareholders who are not pure residual claimants; e.g., a shareholder who

owns one share and is also short one or more shares) as well as shares that are

“legally encumbered” (held or associated with more than one shareholder; e.g.,

shares that are loaned to a short, who sells that share to another buyer). The oneshare/

one-vote rule is not only economically suboptimal, but results in substantial

deleterious consequences. Quorum and regulatory requirements are distorted;

mergers and acquisitions are too easily approved; securities class actions are undervalued

and simultaneously under- and over-compensate; bankruptcy distributions

are over- and under-inclusive; and fixed-ratio stock offers are preferred over

economically superior alternatives. These results all derive from an unfounded reliance

upon the one-share/one-vote principle and the belief that even economically

or legally encumbered shares are entitled to vote.

※ 메모:

The impetus for a one-share/one-vote requirement in U.S. markets was not

competition for state corporate charters; most states permitted, and still permit, the

creation of classes of shares with limited voting rights. Nor did the pressure come

initially from market participants; during the early twentieth century, companies had little

difficulty selling shares with no voting rights at all. Shareholders apparently understood

that their power came from the threat to exit by selling shares, not from the (rarely

exercised) right to vote.40

Instead, the requirement of one-share/one- vote stemmed from a populist uprising

and the New York Stock Exchange’s worries about possible federal regulation (and

related damage to its reputation). During the 1920s, corporations increasingly restricted

the voting rights of certain classes of shareholders, moving away from one-share/onevote.

In 1925, when a few leading corporations, including Dodge Brothers, Inc., and

Industrial Rayon Corporation, sold major issues of no nvoting common stock, there was

widespread public criticism.41 In response, the NYSE began disapproving of the listing

of nonvoting common stock issues. As Joel Seligman has concluded, “[i]n retrospect, the

primary motivation for the NYSE’s initial decision on nonvoting common stock was

concern about public opinion.”42

During the next several decades, the NYSE generally continued its practice of

refusing to list companies with nonvoting shares, with a few prominent exceptions when

it was politically or economically inconvenient.43 This relatively stable period apparently

is the one from which Easterbrook and Fischel derive their conclusion that one-share/onevote

has been the dominant rule and practice.

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[43] For example, in 1956, the NYSE agreed to list a class of shares of Ford Motor

Company, even though the Ford family controlled 40 percent of the company’s voting power.

See Robert B. Thompson, Collaborative Corporate Governance: Listing Standards, State Law and

Federal Regulation, 38 Wake Forest L. Rev. 961, 977 (2003). The NYSE also has listed shares of

The New York Times, even though public shares had only one vote, while the insider (family)

stock had ten.

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In the 1980s, competition in the market for corporate control increased markedly,

and voting practices became more important.44 The threat of hostile takeovers led managers to favor moving away from the principle of one-share/one-vote to other voting

regimes, most notably dual-class recapitalizations.45 Managers perceived that oneshare/

one- vote was costly to them, and began to lobby for changes to NYSE practice. At

the same time, the NYSE, having enjoyed a dominant market position for decades, found

its listings challenged by the NASDAQ and AMEX, neither of which required oneshare/

one- vote. In response to these political and economic pressures, the NYSE

abandoned its early policy, and began permitting voting regimes other than oneshare/

one- vote, formally liberalizing its approach in 1986 (three years after Easterbrook

and Fischel’s article on corporate voting was published).46 (생략)