Riding off into the Sunset: Dual-Class Structure in the Age of Unicorns Going Public

다국어 초록 (Multilingual Abstract)

The increasing adoption of dual-class shares (DCS)-an ownership structure that gives corporate insiders superior voting power than other shareholders-among newly listed companies has raised significant governance concerns. We investigate the decision to adopt and the value implications of DCS structure in the recent U.S. IPOs. Using an instrumental variable approach, we find significant post-IPO outperformance by firms adopting DCS with sunset provisions, which stipulate DCS to cease after a certain period, compared to non-DCS firms and DCS firms without sunsets. This outperformance is more pronounced for firms in high-tech industries. DCS firms with sunset provisions are also associated with more innovative outputs, higher profitability, and a greater marginal value of cash holdings, suggesting that they have more value-enhancing investment opportunities. Our results provide a justification for the deregulation of the listing requirements by stock exchanges around the world.

목차 (Table of Contents)

• ABSTRACT
• I. Introduction
• II. Data and Methodology
• III. Empirical Results
• IV. Concluding Remarks
• References