Voting in Assemblies of shareholders and Incomplete Markets

M. Tvede, H. CRES

Economic Theory

novembre 2005, vol. 6, n°4, pp.887-907

Départements : Finance

An economy with two dates is considered, one state at the first date and a number of states at the last date. Shareholders determine production plans by voting one share, one vote and at majority stable stock market equilibria, alternative production plans are supported by at most 100% of the shareholders. It is shown that a majority stable stock market equilibrium exists if S J S J +1,where S is the number of states at the last date and J is the number of rms. Moreover, an example shows that majority stable stock market equilibria need not exist for smaller'sStockholders, Studies, Securities markets, Equilibrium, Economic models, Voting