Control beyond warranted by the equity

Sammanfattning: In this research we investigate the relationship between excess control and changes in asymmetric information during quarterly and annual earnings announcements. The focus remains on controlling shareholders possessing excess control within a dual-class share structure. We calculate changes in asymmetric information in an event study performed upon quarterly and annual report announcements using relative bid-ask spreads. Excess bid-ask spreads are calculated for three periods surrounding the announcement. Excess control is defined as the difference between fractional holdings of company votes and capital. Further, the relationship is measured within A-class and B-class shares respectively, taking into account four different investor categories. We also specifically control for compliance with the Swedish Code of Corporate Governance. The sample constitutes all companies listed on Nasdaq OMX Nordic during a five-year period form 2008 through 2012. Our results show that excess control has a reducing effect on levels of asymmetric information as measured by excess bid-ask spread in both A-class and B-class shares. When investigating the relationship within different ownership categories, the results indicate that excess control only has a mitigating effect on bid-ask spreads if the controlling shareholder is a founder family or non-family founder.