Volume 21, Issue 1

The premise for protecting shareholders from dilution, a loss of wealth and control through providing pre-emptive rights, is that agents may not act in the interests of principals. Proponents of pre-emptive rights emphasize protecting the democratic nature of the limited liability corporation while opponents argue that professional management have greater insights regarding capital formation and growth opportunities. From a financial theory perspective, the argument for protection rests upon whether the costs of debt and of equity reflect capital structure as well as the potential for changes, as ultimately reflected in share prices. Applying financial theory and statistical analysis, we explore if shareholders need protection from dilution, or if the risks are already capitalised into share prices. Our findings and insights cast doubt on the benefits of such protection and the legal basis for compensation.

The controlling shareholder of a company has the potential to extract private benefits of control (PBC). In contrast to shared benefits, PBC are proceeds that accrue only to the majority shareholders. They can take a variety of forms that range from outright theft to a (covert) compensation for private costs incurred in controlling the company. It is notoriously difficult to measure PBC and the literature only provides a rough guidance based on two methods: the control premium method and the voting premium method. These two methods are based on the logic that PBC must be the reason why the controlling shareholder pays a premium over the market price for a controlling block or why voting and non-voting shares are priced differently. This paper introduces a third method to estimate the PBC. We look at the discount (compared to a baseline valuation made at the controlling level) that minority shareholders ask to invest in a company. In the context of private companies, we find a discount of 16.72 % that translates into estimated PBC of 20.08 % (premium per share). We argue that the discount for lack of control can be explained as a discount for private benefits.

This paper shows that changes in the product-liability regime influence workforce welfare via an adjustment of the wage resulting from firm-union bargaining. Shifting more losses to consumers increases (decreases) equilibrium wages when consumers underestimate (overestimate) product risk. We highlight an important yet unexplored link between product liability and worker welfare relevant to policy-making.

The present model focuses on how people decide to get vaccinated, based on their beliefs and costs and on the public information concerning the disease severity, that in turn depends on the vaccination coverage. This interplay between beliefs and outcomes gives rise to a dynamical learning process, whose steady state is a self-fulfilling equilibrium . Although equilibrium levels of immunization and disease severity do not depend on beliefs, even in equilibrium heterogeneous people interpret the severity/coverage relation in different ways. These differences, together with the structural parameters of the model, have important implications for the stability of the equilibrium, finally impinging on the efficacy of policies aimed at correcting the existing state. In fact, we find that when the equilibrium disease severity is too high and immunization is suboptimal, mandatory vaccination and nudging can be valid options for fighting vaccination hesitancy (while moral suasion looks less effective); in addition, some policy mixes turn out to be very effective. However, given the interaction between beliefs, learning, and policies, the wished policy goal cannot be achieved immediately with precision, due to possible instability of equilibria. This supports the idea that immunization must be encouraged by using mixes of persistent policies.

This paper examines how individuals value the establishment of a regulatory mechanism for revival churches (RCs). The analysis focuses on a sample of 1,475 individuals living in the Cameroonian cities of Yaoundé and Douala, based on a field survey. Drawing on theoretical and empirical literature, particularly in the fields of economics of religion, regulatory economics, and experimental economics, the econometric results obtained using the choice experiment method and a nested logit model show that individuals are in favor of setting up a mechanism to reduce the abuses of revival churches having as attributes: (i) “the census of RCs and their pastors”, (ii) the closure of RCs whose pastors have not received theological training from an accredited school, and (iii) the closure of rented RCs. These people are willing to pay 176 XAF for “the census of RCs and their pastors”, 140 XAF for “the closure of RCs where pastors have not received theological training from an accredited school”, and 253 XAF for “the closure of rented RCs”.