Our speaker will be Paul Voss (Central European University (CEU)).

He will give a talk on “Decoupling Voting and Cash Flow Rights" (joint with Andras Danis and Andre Speit).

Abstract: 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.

The talk will take place on April 12, 2023 at 12:00 noon in room D3.0.225.