<p>The share value comes from expected discounted cash flows – either from dividends or from share price increases. These can be used for financing consumption from which people derive utility. See Cochrane's <a href="https://www.johnhcochrane.com/asset-pricing" rel="nofollow noreferrer">&quot;Asset Pricing&quot;</a> suite, start from chapter 2 of the textbook.</p>
<p>If you think that the current management of Google is incompetent and you could do better in terms of the cash flows that Google generates for its shareholders, then a voting right would give you a chance to do that. You would thus be able to increase the value of the company and the price of its shares. However, I think a presumption of you being able to do better than the current management is not very realistic.</p>

CC BY-SA 4.0
2022-03-19T17:52:54.053Z
@NicSzerman, I have merely reproduced a basic claim from standard asset pricing theory. Did I get it wrong? What is it that you find lacking? I also suggest that critical *ad hominem* remarks are not helpful.
Richard Hardy
CC BY-SA 4.0
2022-03-19T07:09:48.233Z
2022-03-19T07:15:15.817Z
2022-03-19T07:15:15.817Z
Richard Hardy
<p>I recently found out that the difference between GOOG and GOOGL shares is that GOOG shares do not have voting rights. Then I read that the leadership is not planning to pay dividends anytime soon (rather they prefer to reinvest).</p>
<p>Why do GOOG shares have value? Is it an irrational market? More remarkably, GOOG share price is typically within &lt;1% of GOOGL share price, how come!?</p>

CC BY-SA 4.0
2022-03-18T14:55:02.467Z
Why should voting rights command a premium in the market? Do you think your vote would lead to better decisions at Google in terms of future dividends and share price increases?
Richard Hardy
CC BY-SA 4.0
2022-03-18T17:16:18.003Z
@RichardHardy I think (or at least used to) that voting rights give most of the value to shares. So to answer your question, I should understand first where does the value actually come from? Do you know?
Nic Szerman
CC BY-SA 4.0
2022-03-18T17:53:46.543Z
Again, if you think that the current management of Google is incompetent and you could do better, then a voting right would give you a chance to do that. You would thus increase the value of the company. The value of the company is reflected by its market price, i.e. the share price multiplied by the number of outstanding shares. However, I think a presumption of you being able to do better than the current management is rarely realistic.
Richard Hardy
CC BY-SA 4.0
2022-03-18T19:12:56.680Z
I understand, but you're not addressing the topic at hand: Where does the share value come from? @RichardHardy
Nic Szerman
CC BY-SA 4.0
2022-03-18T19:18:58.463Z
The share value comes from expected discounted cash flows – either from dividends or from share price increases (which can then be used for financing consumption from which people derive utility).
Richard Hardy
CC BY-SA 4.0
2022-03-18T22:04:09.930Z
Lot's online that explains how shares are valued. Probably a good starting point is [money se](https://money.stackexchange.com/q/51976). In the end, it's an ownership stake at a massive company. If someone else wants to own parts, or more parts, they need to find someone else who sells shares. Voting plays close to no role even if you had the right at such a big company, unless you are a massive shareholder. Insofar, choosing to vote is probably irrational (Google paradox of voting).
Alex
CC BY-SA 4.0
2022-03-18T22:38:24.260Z
@Alex How can one have an ownership stake without having voting rights? I see them as coming hand in hand.
Nic Szerman
CC BY-SA 4.0
2022-03-18T22:40:57.213Z
@RichardHardy yea but in this case the shares are not expected to give dividends right? And voting rights are super important - even if a company is never expected to generate any profits (nor losses), then being able to control this company is also valuable right.
Nic Szerman
CC BY-SA 4.0
2022-03-18T23:37:53.520Z
Could you give me an example of what you would like to do with your voting rights at Google that will make the company better? Or if you ever owned some shares at some company with voting rights, what you did with your voting rights to improve that company. Also, how should a voting right help you at a company that never generates profits. That's economically completely useless.
Alex
CC BY-SA 4.0
2022-03-19T07:05:08.970Z
@NicSzerman, I said *either from dividends or from share price increases* (or both). You can still hope for share price increases of GOOG. How can voting rights be important if the company will never generate any profit or loss? People value consumption which can be purchased by money. If the company is not generating money, there is nothing in it that is valuable. (Nonprofit organizations is a different story, though.)
Richard Hardy
CC BY-SA 4.0
2022-03-22T17:36:45.120Z
@user253751 that's a good point, thanks
Nic Szerman
CC BY-SA 4.0
2022-03-18T08:44:20.833Z
Because Google/Alphabet is essentially controlled by its founders and early investors (e.g. through non-traded Class B shares) the voting rights in GOOGL Class A shares are not particularly valuable when compared to non-voting GOOG Class C shares.
Henry
<stock-market><asset-pricing><voting>
If GOOG shares confer no voting rights, where do their value comes from?
Nic Szerman
# If GOOG shares confer no voting rights, where do their value comes from?

(Asked by: username_0 on 2022-03-17)

I recently found out that the difference between GOOG and GOOGL shares is that GOOG shares do not have voting rights. Then I read that the leadership is not planning to pay dividends anytime soon (rather they prefer to reinvest).

Why do GOOG shares have value? Is it an irrational market? More remarkably, GOOG share price is typically within <1% of GOOGL share price, how come!?

**Tags:** stock-market, asset-pricing, voting

> **Comments:**
> **username_3**: Because Google/Alphabet is essentially controlled by its founders and early investors (e.g. through non-traded Class B shares) the voting rights in GOOGL Class A shares are not particularly valuable when compared to non-voting GOOG Class C shares.  
> **username_1**: Why should voting rights command a premium in the market? Do you think your vote would lead to better decisions at Google in terms of future dividends and share price increases?  
> **username_0**: @RichardHardy I think (or at least used to) that voting rights give most of the value to shares. So to answer your question, I should understand first where does the value actually come from? Do you know?  
> **username_1**: Again, if you think that the current management of Google is incompetent and you could do better, then a voting right would give you a chance to do that. You would thus increase the value of the company. The value of the company is reflected by its market price, i.e. the share price multiplied by the number of outstanding shares. However, I think a presumption of you being able to do better than the current management is rarely realistic.  
> **username_0**: I understand, but you're not addressing the topic at hand: Where does the share value come from? @RichardHardy  
> **username_1**: The share value comes from expected discounted cash flows – either from dividends or from share price increases (which can then be used for financing consumption from which people derive utility).  
> **username_2**: Lot's online that explains how shares are valued. Probably a good starting point is [money se](https://money.stackexchange.com/q/51976). In the end, it's an ownership stake at a massive company. If someone else wants to own parts, or more parts, they need to find someone else who sells shares. Voting plays close to no role even if you had the right at such a big company, unless you are a massive shareholder. Insofar, choosing to vote is probably irrational (Google paradox of voting).  
> **username_0**: @username_2 How can one have an ownership stake without having voting rights? I see them as coming hand in hand.  
> **username_0**: @RichardHardy yea but in this case the shares are not expected to give dividends right? And voting rights are super important - even if a company is never expected to generate any profits (nor losses), then being able to control this company is also valuable right.  
> **username_2**: Could you give me an example of what you would like to do with your voting rights at Google that will make the company better? Or if you ever owned some shares at some company with voting rights, what you did with your voting rights to improve that company. Also, how should a voting right help you at a company that never generates profits. That's economically completely useless.  
> **username_1**: @NicSzerman, I said *either from dividends or from share price increases* (or both). You can still hope for share price increases of GOOG. How can voting rights be important if the company will never generate any profit or loss? People value consumption which can be purchased by money. If the company is not generating money, there is nothing in it that is valuable. (Nonprofit organizations is a different story, though.)  
> **username_0**: @user253751 that's a good point, thanks  

---

## 1 answers

### Answer by username_1 on 2022-03-19. Score: 4

The share value comes from expected discounted cash flows – either from dividends or from share price increases. These can be used for financing consumption from which people derive utility. See Cochrane's ["Asset Pricing"](https://www.johnhcochrane.com/asset-pricing) suite, start from chapter 2 of the textbook.

If you think that the current management of Google is incompetent and you could do better in terms of the cash flows that Google generates for its shareholders, then a voting right would give you a chance to do that. You would thus be able to increase the value of the company and the price of its shares. However, I think a presumption of you being able to do better than the current management is not very realistic.

> **Comments:**
> **username_1**: @NicSzerman, I have merely reproduced a basic claim from standard asset pricing theory. Did I get it wrong? What is it that you find lacking? I also suggest that critical *ad hominem* remarks are not helpful.  

---

