The Life-Cycle of Dual Class Firms

The Life-Cycle of Dual Class Firms

Martijn Cremers, Beni Lauterbach, Anete Pajuste

Series number :

Serial Number: 

Date posted :

February 06 2018

Last revised :

February 04 2018
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  • Dual Class Shares • 
  • life cycle • 
  • anti-takeover defenses • 
  • Unifications • 
  • sunset provisions

We examine an extensive matched sample of U.S. dual and single class firms in 1980-2015 from the time of their IPO, and document that the valuation difference between dual and single class firms varies along their life cycle.

On average, at the time of the IPO, dual class firms tend to have higher valuations than single-class firms, which valuation premium dissipates over time and turns into a discount about six years after the IPO. Further tests examine firm’s survival and other life cycle phenomena and the desirability of a sunset provision for dual class structures.