Suppose you have been informed that Pegasus does business in a jurisdiction with weak protections of minority shareholders. Moreover, 50% of Pegasus shares are owned by a large dominant shareholder who is expected to capture 60% of Pegasus equity value. 

What would you estimate to be the market value of an individual minority share of stock in Pegasus? 

What would be the value of each share held by the large dominant shareholder?

Answer rating: 100% (QA)

SOLUTION Given that Pegasus operates in a jurisdiction with weak protections of minority shareholders the value of an individual minority share of stock in Pegasus could be affected by the potential for expropriation or other actions that may disadvantage minority shareholders Assuming that the large dominant shareholder ... View the full answer