An application of game theory to corporate governance

This paper examines the issue of equity in the distribution of voting power among shareholders of a company. The prevailing one-share-one-vote simple majority voting system is seen to give to certain shareholders voting power out of proportion to their shareholdings, and ways of bringing about a more equitable voting power distribution by changing the threshold for winning or departing from the one-share-one-vote principle are studied. Several effective solutions are found and their practical implications are discussed.