Dual Class Shares
Working Paper
Will Tenure Voting Give Corporate Managers Lifetime Tenure?
Dual-class voting systems have been widely employed in recent initial public offerings by large tech companies, but have been roundly condemned by institutional investors and the S&P 500. As an alternative, commentators have proposed adoption...Read more
Private Ordering and the Role of Shareholder Agreements
Corporate law has embraced private ordering -- tailoring a firm’s corporate governance to meet its individual needs. Firms, particularly venture-capital backed start-ups, are increasingly adopting firm-specific governance provisions such as dual-...Read more
The Life-Cycle of Dual Class Firms
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 over their life cycle. On average, around...Read more
Loyalty Shares with Tenure Voting - Does the Default Rule Matter? Evidence from the Loi Florange Experiment
The contractual theory of the firm predicts that companies adopt charters that maximise firm value, regardless of the default rule. We test this proposition around an exogenous switch of the default from one share-one vote to tenure voting...Read more
The Perils of Small-Minority Controllers
This Article contributes to the long-standing and heated debate over dual-class companies by placing a spotlight on a significant set of dual-class companies whose structures raise especially severe governance concerns: those with controllers...Read more
Sticking around Too Long? Dynamics of the Benefits of Dual-Class Voting
Using a new dataset of corporate voting-rights from 1971 to 2015, we find that young dual-class firms trade at a premium and operate at least as efficiently as young single-class firms. As dualclass firms mature, their valuation declines, and...Read more
Does Diversification of Share Classes Increase Firm Value?
Firms can issue stocks classified in many ways. They can be classified in respect to voting rights, dividend rights, redemption rights, conversion rights, and many others. In this study, we ask if it is desirable to give greater freedom to firms...Read more
Corporate Control, Dual Class, and the Limits of Judicial Review
Companies with a dual-class structure have increasingly been involved in highprofile battles over the reallocation of control rights. Google, for instance, sought to entrench its founders’ control by recapitalizing from a dual-class into a triple...Read more
Synthetic Governance
Scholars, practitioners and policymakers continue to debate what constitutes “good” corporate governance. Academic efforts to evaluate the effect of governance provisions such as dual class voting structures, staggered boards of directors and...Read more
Changing Corporate Governance Norms: Evidence from Dual Class Shares in the U.K.
In the U.K., between 1955 and 1970, dual class shares quickly lost popularity without any regulatory intervention. The decline in the use of dual class shares was positively correlated with the relative valuations of one-share-one-vote and dual...Read more
Ownership, Investment and Governance: The Costs and Benefits of Dual Class Shares
In this paper we show that dual-class shares can be an answer to agency conflicts rather than a result of agency conflicts. When a firm issues voting shares to raise funds, an incumbent manager?s control rights are diluted. This increases the...Read more