Title: Do deviations from shareholder democracy harm sustainability? An empirical analysis of multiple voting shares in Europe

Authors: Marco Fasan; Elise Soerger Zaro; Cláudio Soerger Zaro; Cesare Schiavon; Ernesto-Marco Bagarotto

Addresses: Department of Management, Cannaregio 873, 30212 Venezia, Italy ' Department of Accounting, KM 12, Caixa Postal 364, Rod. Dourados-Itahum, 79804-970, Dourados – MS, Brazil ' Department of Accounting, KM 12, Caixa Postal 364, Rod. Dourados-Itahum, 79804-970, Dourados – MS, Brazil ' Morrow Sodali Spa, Via XXIV Maggio, 43, 00187, Rome, Italy ' Department of Management, Cannaregio 873, 30212 Venezia, Italy

Abstract: This paper builds on previous literature on corporate governance and sustainability by studying the relation between the adoption of multiple voting shares (MVS) and environmental, social and governance (ESG) performance. More specifically, it hypothesises that controlled companies with MVS have lower sustainability performance than controlled companies without MVS because of different shareholders incentives. We rely on a proprietary dataset that includes 1,940 firm-year observations from 11 European countries, between 2016 and 2018 and we conduct multivariate analyses. To account for endogeneity and to further strengthen the results, we performed a difference-in-differences (diff-in-diff) analysis. We find that companies controlled by a dominant shareholder through MVS have lower sustainability performance compared to controlled companies without MVS.

Keywords: sustainability; corporate governance; multiple voting shares; MVS; short termism; environmental; social and governance; ESG.

DOI: 10.1504/IJBGE.2023.129417

International Journal of Business Governance and Ethics, 2023 Vol.17 No.2, pp.111 - 130

Received: 15 Nov 2020
Accepted: 18 Jun 2021
Published online: 09 Mar 2023 *

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