Voting and Power in the Small Firm: Alternatives to the One-Share, One-Vote Rule

Authors

Robert Goon, Long Island University
John L. Teall, Pace University

Abstract

The one-share, one-vote rule applicable to the governance of most business firms provides for proportional voting power which differs substantially from proportional shareholdings of investors. This problem is particularly acute in small firms where several (or many) shareholders may hold significant proportions of shares. This paper reviews well-known game theoretic algorithms (weighting or vote assignment schemes) for the alignment of power with proportional shareholdings. It also provides a simple measure of the “misalignment of power from proportional shareholdings” and discusses its application in determining more equitable vote reassignment schemes.

JEL Codes

L25, G34, G32

Keywords

Voting, Governance, One-Share One-Vote, Cumulative Voting, Small Firm, Small Business

Recommended Citation

Goon, Robert and Teall, John L. (1994) "Voting and Power in the Small Firm: Alternatives to the One-Share, One-Vote Rule," Journal of Small Business Finance: Vol. 3: Iss. 2, pp. 127-139.
DOI: https://doi.org/10.57229/2373-1761.1148
Available at: https://digitalcommons.pepperdine.edu/jef/vol3/iss2/3