The Finance Brown Bag Seminar is held by the Institute for Finance, Banking and Insurance (WU Vienna) and the Vienna Graduate School of Finance (VGSF). It serves as a presentation platform for PhD students, faculty members, and visitors. An overview of BBS on the website of the Institute for Finance, Banking and Insurance.
Paul Voss, Central European University (CEU)
Decoupling Voting and Cash Flow Rights
(with A. Danis and A. Speit)
The equity lending and option markets allow investors to decouple cash flow claims and voting rights of shares. Empirical studies show that the implied prices of voting rights differ substantially across these two markets. This paper provides a theoretical explanation for this puzzling finding: The price differential arises because the equity lending market allows activist investors to exploit coordination failures among shareholders more than the option market. Still, we show that activist investors may buy voting rights in both markets, despite endogenously lower prices in the equity lending market. Our results apply to any financial instrument used for decoupling.