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

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.