Dual-class firms: a comprehensive literature review

Abstract

Going public with Dual-class structure is a controversial way of accessing capital market as it deviates from one share one vote regime therefore; it is greatly criticized by investors and academicians. It is believed that insiders choose this structure to expropriate minority shareholder's wealth and to extract private benefits. These firms issue multiple classes of shares with different voting rights whereas cash flow rights are identical. This paper gives detail insight to studies carried out on Dual-class firms in the dimensions of determinants, pricing, performance and level of corporate governance. We highlighted gaps and proposed several directions for future research in these dimension.