The Value of Voting Rights in Italian Cooperative Banks: A Quasi-Natural Experiment

It is widely believed in the corporate governance literature that deviating from the `one share-one vote' principle leads to corporate inefficiencies. We analyze the market reaction to a change from the `one head-one vote' to the `one share-one vote' mechanism by means of a quasi-natural experiment: an Italian reform forcing a subset of cooperative banks to transform into joint-stock companies. We estimate the market valuation of the effects of the governance change around the event date being equal to a cumulative average return of about 14% using an event study methodology, and of about 13% using bayesian techniques.