#4700. Theory, Evidence, and Policy on Dual-Class Shares: A Country-Specific Response to a Global Debate

July 2026publication date
Proposal available till 23-05-2025
4 total number of authors per manuscript0 $

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Journal’s subject area:
Business, Management and Accounting (miscellaneous);
Business and International Management;
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Abstract:
In the 1980s, stock exchanges and eventually the SEC (The United States Securities and Exchange Commission) took actions that affected the eligibility of listed firms to adopt dual-class shares with differential voting rights. We find that risk-adjusted stock returns increase (decrease) in reaction to regulatory events that decrease (increase) the probability of firms’ ability to adopt dual-class shares. This short run reaction varies systematically across firms, suggesting that dual-class shares are viewed positively in research intensive and well-governed firms. In the long run, banning dual-class shares leads to lower research output, firm value, and profitability. Overall, our results suggest dual-
class shares facilitate innovation and increase valuations.
Keywords:
Capital markets; Controlling shareholders; Corporate governance; Dual-class shares; Regulatory competition

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