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01 October 2016  

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See the latest research from the ECGI published in the ECGI Finance Working Paper series
Thu, 19 Nov 2015 10:45 GMT  
ECGI Finance Working Paper 456/2015

by
Giovanna Nicodano, University of Turin and ECGI Luca Regis, IMT Institute for Advanced Studies Lucca

Submitted by
Giovanna Nicodano
Keywords:
Ownership Structure, Capital Structure, Dividend Taxes, Thin Capitalization, Groups, Securitization, Private Equity

This paper studies the ownership connection between two units that share a common controlling entity. Our results generate diverse organizations, including the horizontal groups of US family firms and the hierarchical ownership of both multinationals and European groups. The driver of ownership is the optimal capital structure associated with the tax-bankruptcy trade-off. We also examine optimal mutations in response to dividend taxes, to caps on interest deductions and to “no bailout” rules.


to view details and download this Working Paper from the SSRN website

All ECGI Working Papers in the Law and Finance series are available on the ECGI website at www.ecgi.org/wp
See the latest research from the ECGI published in the ECGI Law Working Paper series
Tue, 09 Aug 2016 16:20 GMT  
ECGI Law Working Paper 325/2016

by
Christoph Van der Elst, Tilburg University and ECGI

Submitted by
Christoph Van Der Elst
Keywords:
Say on pay, shareholder votes, CEO compensation, shareholder activism, disclosure

Say on pay is considered an important tool to mitigate inappropriate remuneration practices. Over the years, many countries provided shareholders with this say on pay-tool, although often the vote is exclusively of an advisory nature. We analyse the regulatory framework of say on pay in two of these countries, the UK and Belgium. We provide evidence on the evolution of the dissenting votes of the remuneration report and identify the companies that experienced a disapproved remuneration report. We assess the effect of this dissenting vote by analysing the subsequent remuneration report and shareholders’ vote as well as the evolution of the stock price. Although there are only limited guidelines how to address the dissenting vote and how to compile an adequate response, we found that many companies adjusted their remuneration practices, in particular the disclosing of pay-related information and amending bonus schemes. Remuneration levels are generally not adjusted. However, not all companies responded to the discontentment of the shareholders. The shareholders often positively react on the presented amendments in the subsequent vote of the remuneration report, but shareholder remain critical. Some subsequent shareholder approvals are hard to interpret. The research shows that say on pay positively affects communication between shareholders and companies but more is to be done on guiding the information exchange. We provide in a number of suggestions thereto.


to view details and download this Working Paper from the SSRN website

All ECGI Working Papers in the Law and Finance series are available on the ECGI website at www.ecgi.org/wp