Tenure voting rights, which grant increased voting power to long-term shareholders, reward duration, stability, and strategic patience. They allow founders and insiders to maintain control while accessing public capital. And when structured carefully, they can help create a shareholder base aligned with long-term corporate goals, reducing speculative behavior and fostering strategic stability. But tenure voting is not just about who holds power—it’s about when they do so, and for how long.

In the United States, tenure voting has been on the radar since the 1980s. Yet, its adoption has been limited and short-lived. Nonetheless, a number of scholars and commentators have underscored its potential benefits as a more palatable alternative to dual-class structures with high- or no-vote shares. By rewarding shareholders who remain invested over time, it encourages deeper engagement without disenfranchising those with a shorter investment horizon. These advantages may be even more pronounced when one considers that the effects of tenure voting can vary depending on the maturity and life-cycle stage of the adopting company.

Italy offers a valuable natural experiment in this regard. Following a 2014 reform, Italian listed companies were allowed to adopt tenure voting structures—offering double voting rights to shareholders who maintained uninterrupted ownership for 24 months. Some companies adopted them early, others much later. Some used them to stabilize growth, Others to defend long-established rule. This creates a rich empirical basis to explore not just whether tenure voting works—but when, why, and how.

In a new article, I draw on a longitudinal panel of 412 Italian listed companies between 2013 and 2022 to track the evolution of tenure voting adoption and its association with financial performance, trading behavior, board structure, and strategic activity. What emerges from the data is not a single verdict on tenure voting, but a nuanced insight: Its effects vary significantly across the corporate lifecycle. Adopted early, tenure voting rights help firms grow. Adopted late, they often serve to preserve control structures or continuity in governance rather than fostering long-term investment. Hence, governance tools must fit their moment—or risk undermining the strategy they’re meant to protect.

Data Insights

To analyze how loyalty shares operate across different corporate lifecycles, I classified firms into four maturity categories—Emerging, Developing, Established, and Mature—based on a composite index derived from normalized values of key firm-level indicators: total assets, number of employees, revenues, and net working capital. Firms in the lowest quartile across these metrics were designated as Emerging, reflecting their limited scale, early-stage operations, and resource constraints. Those falling between the 25th and 50th percentiles were categorized as Developing, indicating modest growth and partial structural consolidation. Firms in the 50th to 75th percentile were labeled Established, typically exhibiting more robust operations and governance. Finally, firms in the top quartile were classified as Mature, characterized by size, strategic capacity, and financial stability. This categorization enables a lifecycle-sensitive assessment of governance strategies and their heterogeneous effects.

In my article, I show that the adoption of loyalty shares is far from uniform in effect—it operates as a flexible governance instrument whose impact varies dramatically across firm size, maturity, and strategic orientation. Early adoption by emerging firms often correlates with higher revenue per share and more aggressive M&A strategies, particularly in resource-constrained contexts where loyalty shares appear to serve as a commitment device to attract long-term capital. Yet this is a minority trend: Only around 5 percent of emerging or developing firms adopt loyalty shares, in stark contrast to adoption rates exceeding 17 percent among mature firms, which tend to be larger and more stable. In the latter entities, loyalty shares are associated with reduced trading volumes—dropping from an average of 41.8 million to just 7 million shares annually—and higher median earnings, pointing to investor continuity and lower volatility.

Interestingly, the findings challenge the widespread belief that loyalty shares universally dampen strategic dynamism. The average number of M&A deals per firm is in fact higher among adopters (0.72 vs. 0.35), and further analysis confirms that this association remains statistically significant in the contemporaneous period (i.e., the year of adoption). Still, this positive correlation does not persist over time, and sectoral breakdowns show that the effect is most pronounced in tech and telecom firms, but absent—or even negative—in manufacturing.

Leverage effects are also complex. While adopters tend to carry slightly higher long-term debt, the relationship weakens over time. My article’s main contribution is to show that loyalty shares are not a blunt instrument of entrenchment nor a panacea for short-termism. They are governance tools whose benefits depend on when—and by whom—they are deployed. Firms that adopt too late, or without the structural capacity to sustain them, may find themselves insulated but inert. By contrast, well-timed adoption aligned with firm maturity and sectoral dynamics can unlock long-term strategic flexibility without sacrificing accountability.

Conclusion: Timing Is Strategy

Tenure voting rights are not inherently good or bad. Like any governance instrument, their value lies in when they are used and how they align with a firm’s strategic arc. The Italian experience shows that they enable growth and stability when well-timed, but risk entrenchment and inertia when misapplied or left unchecked.

This dynamic can be illustrated with a cultural example. In Game of Thrones, the struggle for power on the fictional continent of Westeros reveals a key truth: Power does not belong to the strongest fighter, the richest house, or the most virtuous ruler. Instead, it belongs to those who understand timing—those who act not just forcefully, but strategically, when the moment is right. Consider three major ruling families. House Stark, known for its integrity and honour, is governed by principle—but its members’ refusal to compromise or adapt to political realities led to their downfall. House Targaryen returned from exile with overwhelming force but failed to win the hearts and trust of those it sought to rule—ultimately destroying its own support. House Lannister held power the longest, thanks to cunning and tight control, but its obsession with dominance created internal fractures and external enemies, causing its eventual collapse. In each case, it was not a lack of strength or legitimacy that brought ruin. It was a failure to act wisely at the right time. Power without situational awareness proved to be no power at all.

So too in corporate governance. Tenure voting rights can rally support in early stages, support bold moves in periods of expansion, and shield strategy from volatility. But over time, the same structures—if left unexamined—can separate firms from the shareholders they serve.

The lesson is clear: In the game of votes, as in the Game of Thrones, power is not about who holds the crown. It’s about knowing when to wear it—and when to set it down.

This post comes to us from Professor Maria Lucia Passador at Bocconi University – Department of Law. It is based on her recent article, “Game of Votes: The Lifecycle Effects of Tenure Voting,” available here.