Changing corporate governance norms: Evidence from dual class shares in the UK

2019 ◽  
Vol 37 ◽  
pp. 15-27 ◽  
Author(s):  
Fabio Braggion ◽  
Mariassunta Giannetti
Keyword(s):  
Corporate Governance ◽  
Dual Class Shares ◽  
The Uk ◽  
Dual Class

scholarly journals Permitting dual class shares in the UK premium listing regime – a path to enhance rather than compromise investor protection

Legal Studies ◽  
2021 ◽  
pp. 1-23
Author(s):  
Min Yan
Keyword(s):  
Stock Exchange ◽  
Investor Protection ◽  
Market Mechanism ◽  
High Tech ◽  
Shareholder Protection ◽  
Shareholder Engagement ◽  
The One ◽  
Dual Class Shares ◽  
The Uk ◽  
Dual Class

Abstract Unequal voting rights arrangements under dual class share structures are increasingly favoured by entrepreneurs and founders of technology companies, in order to retain a degree of control over the company that is disproportionate to their equity shareholdings. The rise of such share structures around the world has put competitive pressure on the UK Government and the country's financial regulator to relax the one share, one vote principle in the premium listing regime of the London Stock Exchange, to ensure the UK equities market remains world-leading and fit for the future development of the economy. There is, however, a long tradition of institutional investors’ distaste for dual class share structures. In fact, the near extinction of dual class listings in the UK capital markets can be largely attributed to the opposition of large British institutions. Therefore, this paper will critically discuss the conflict between the demands to attract listings from high-tech and innovative companies and concerns of a race to the bottom in the UK context. It rebuts criticisms based on investor protection and argues that if dual class companies were permitted to list in the Premium Segment, the higher level of regulatory protection provided in the premium listing regime would help enhance minority shareholder protection and shareholder engagement. The additional safeguarding measures, as we have seen from other global financial centres, would also help to restrain the potential abuse of controllers’ weighted voting power. Together with the market mechanism, permitting dual class listings in the Premium Segment should be welcomed.

scholarly journals UP THE HILL AND DOWN AGAIN: CONSTRAINING DUAL-CLASS SHARES

2021 ◽  
Vol 80 (3) ◽  
pp. 515-551
Author(s):  
Bobby V. Reddy
Keyword(s):  
Cash Flow ◽  
High Growth ◽  
High Quality ◽  
Majority Control ◽  
Dual Class Shares ◽  
The Uk ◽  
Cash Flow Rights ◽  
Dual Class ◽  
Institutional Shareholders ◽  
The Hill

AbstractThe headline recommendation of Jonathan Hill's 2021 UK Listing Review was that dual-class shares structures be permitted on the London Stock Exchange's premium tier. The aspiration was to encourage more high-quality UK equity listings, particularly of high-growth tech-companies, for which dual-class shares are especially beneficial. Dual-class shares allow founders to list their companies, and retain majority-control, while holding significantly less of the cash-flow rights in the company. However, in the UK, dual-class shares are usually discussed in qualified terms, in an attempt to placate sceptical institutional shareholders. Using the UK Listing Review as a platform, this article explores the constraints commonly proposed to be attached to dual-class shares, and argues that, although it is important to protect public shareholders, constraints must not be too severe. A balance must be respected, otherwise UK initiatives to relax rules on dual-class shares could deter the very companies they are intended to attract.

Price Effects of Dual-Class Shares

1986 ◽  
Vol 42 (1) ◽  
pp. 58-67 ◽  
Author(s):  
Vijay M. Jog ◽  
Allan L. Riding
Keyword(s):  
Price Effects ◽  
Dual Class Shares ◽  
Dual Class

Founding Family Ownership and the Selection of Industry Specialist Auditors

2014 ◽  
Vol 28 (2) ◽  
pp. 261-276 ◽  
Author(s):  
Fei Kang
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Structure And Agency ◽  
Founding Family ◽  
Using Data ◽  
Dual Class Shares ◽  
Dual Class ◽  
Selection Of ◽  
Industry Specialist

SYNOPSIS This study examines how family firms' unique ownership structure and agency problems affect their selection of industry-specialist auditors. Using data from Standard & Poor's (S&P) 1500 firms, the results show that family firms are more likely to appoint industry-specialist auditors than non-family firms, which suggests that family firms have strong incentives to signal the quality of financial reporting. Additional analysis indicates that due to the potential entrenchment problems, family firms with family member CEOs or with dual-class shares have even a higher tendency to hire industry-specialist auditors to signal their disclosure quality.

Founders without Limits

2021 ◽  
Author(s):  
Bobby V. Reddy
Keyword(s):  
Stock Exchange ◽  
High Growth ◽  
Global History ◽  
Public Markets ◽  
The Us ◽  
History Of ◽  
The Uk ◽  
Dual Class ◽  
Blue Chip

Big Tech has flourished on the US public markets in recent years with numerous blue-chip IPOs, from Google and Facebook, to new kids on the block such as Snap, Zoom, and Airbnb. A key trend is the burgeoning use of dual-class stock. Dual-class stock enables founders to divest of equity and generate finance for growth through an IPO, without losing the control they desire to pursue their long-term, market-disrupting visions. Bobby Reddy scrutinises the global history of dual-class stock, evaluates the conceptual and empirical evidence on dual-class stock, and assesses the approach of the London Stock Exchange and ongoing UK regulatory reforms to dual-class stock. A policy roadmap is presented that optimally supports the adoption of dual-class stock while still protecting against its potential abuses, which will more effectively attract high-growth, innovative companies to the UK equity markets, boost the economy, and unleash the true potential of 'founders without limits'.

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