Another Option for Determining the Value of Corporate Votes

Speaker
Oguzhan Karakas
London Business School (LBS), University of London

Abstract

This paper proposes a new method using option prices to measure the value of the voting right attached to a stock. The method consists of synthesizing a non-voting share using put-call parity, and comparing its price to that of the underlying stock. Empirically, I find this measure of the value of a voting right to increase around shareholder meetings, particularly for those which are contested. The measure is also more frequently positive for activist hedge fund targets. I estimate the mean (median) annualized value of a voting right to be 1.23% (0.86%) of the underlying stock price.
 
Contact information:
Viorel Roscovan
Email

Information

Type
Research Seminar
Programme
Finance & Accounting
Date
Tue. 18 May. 2010
Time
15:30 - 17:00
Location
Mandeville Building T3-42

Coordinator

Viorel Roscovan
Rotterdam School of Management (RSM), Erasmus University Rotterdam