Although testing the model is by ne

Although testing the model is by necessity limited to the small set of companies whose differential voting stock is traded (so that the price of voting rights can easily be estimated), the implications of my results are much more far-reaching. The price of any common stock includes a vote component, even if, in most publicly traded companies, this value cannot be directly measured. Although under "normal conditions" the fluctuations in this vote component are small enough to be neglected, this is not always the case. Voting premiums can fluctuate widely, and voting rights can sometimes become as valuable as cash-flow rights. In particular, when an event alters the distribution of ownership or the expectation of a contested acquisition, a fraction of the private benefits of control may be reflected in the stock price and may affect its variability in a substantial way. This suggests that it is inappropri-
ate to automatically interpret an increase in the price of a stock as an increase in the value of expected future cash flow; it can simply be a change in the price of votes. It also suggests that this paper's methodology might help future research distinguish between the two explanations.