Construction Ownership Structure : Shaw Communications Equity Structure

1285 Words6 Pages
6.0 Ownership Structure: Shaw communications equity structure is comprised of series A shares and series B shares. Series B shares trade on the Toronto Stock Exchange, and 50% of these shares are owned by the top 25 shareholders. 40% of the shares are owned by financial institutions as part of their investment portfolios. Only 12% of the shares are owned by insiders, i.e. Shaw family and/or executives. Since these shares don’t have voting options, their ownership is mainly for capital gain and dividend purposes. On the other hand, series A shares have an embedded voting option, and 78% of the shares are owned by the Shaw family within the Shaw Family Living Trust (SFLT1). Therefore, Shaw family has total control of the company’s decisions. This increases the overall risk to the firm as ordinary shareholders have no say over the operations of the firm. The main implication is agency risk, as no one can exercise a final vote but the Shaw family. Company decisions could be biased towards Shaw family’s interest, and not in the best interest of other shareholders. Bad signals could make investors to withdraw their investments from the company, and Shaw’s market capitalization would plummet. The dual class structure and the current ownership structure increases the operating risk, and hence the required rate of return for equity. As a consequence the WACC of the firm is deemed to increase. 7.0 Market Value of Capital Structure: As of August 31st, 2015, Shaw Communications’

More about Construction Ownership Structure : Shaw Communications Equity Structure

Get Access