Outlines the special characteristics of preferred shares in Germany, notes that ordinary shares are valued at substantially higher figures and presents a study of the pricing of both types for 58 German companies 1990‐1993. Refers to previous research to develop hypotheses on reasons for the common share premium and an explanatory model which is then applied to the data. Finds that larger premiums are associated with higher ownership concentration and lower trading but not to the proportion carrying voting rights or the cumulative preferred dividends in arrears; and that they are significantly reduced if a family or financial institution is a major shareholder. Goes on to show that where a family is the largest blockholder the premium increases with liquidity but for a financial institution, liquidity reduces the premium. Considers the underlying reasons for this and consistency with other research.
Fatemi, A. and Pieter Krahnen, J. (2000), "On the valuation of common and preferred shares in Germany: new evidence on the value of voting rights", Managerial Finance, Vol. 26 No. 10, pp. 42-54. https://doi.org/10.1108/03074350010766927Download as .RIS
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