Among other new clauses, it partially reinstated tag along rights for voting shares, assuring minority voting shareholders an offer of at least 80% of the price paid for control block shares.
457/1997, which excluded tag along rights for minority voting shareholders, had a negative impact on DCP.
303/2001, which partially reinstated tag along rights only for minority voting shareholders, had a positive impact on DCP.
Hypothesis 3: The voluntary granting of tag along rights for both voting and non-voting shares, or exclusively for non-voting shares, had a negative impact on DCP.
Besides the five main hypotheses related to the mandatory and voluntary granting of tag along rights, and the type of controlling shareholders, we also developed other hypotheses usually tested in the related DCP literature:
Dual Class Premium [DCP]; DIF_LIQ--liquidity differential between voting and nonvoting shares (proxied by LIQvol or LIQneg variables alternatively); DIF_DIV--dividend differential between voting and non-voting shares; ON_conc--controlling shareholder stake of voting shares; TS_conc--controlling shareholder stake of total shares; RAT_ON--ratio of voting shares to total shares outstanding; InTA--firms' size (proxied by Total Assets); LEVER--Financial leverage; LAW6404, LAW9457, and LAW 10303--dummy variables associated with validity of tag along clauses enacted by laws 6.
Both results are consistent with the predictions based on tag along rights granted for voting shares (100% under Law 6.
Table 4 shows statistically significant (at 1% level) correlations of several explanatory variables with DCP in line with our hypothesis: i) the voluntarily granting of tag along rights negatively correlated with DCP; ii) Law 6.
For the remaining variables (firms' size, financial leverage, and voluntary granting of tag along rights), we did not find a significant result after performing FE regressions.
The financing documents contain provisions in favor of the lenders and Triumph customary in transactions of this kind such as affirmative and negative covenants (including restrictions on distributions to, or transactions with Transworld or any other subsidiary), preemptive rights, tag along
and drag along provisions, board of directors, board committee and corporate governance provisions.