What's in a vote? The short- and long-run impact of dual-class equity on IPO firm values

Smart, S B and Thirumalai, R S and Zutter, C J (2008) What's in a vote? The short- and long-run impact of dual-class equity on IPO firm values. Journal of Accounting and Economics, 45 (1). pp. 94-115.

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We find that relative to fundamentals, dual-class firms trade at lower prices than do single-class firms, both at the IPO and for at least the subsequent 5 years. The lower prices attached to duals do not foreshadow abnormally low stock or accounting returns. Moreover, some types of CEO turnover are less frequent among duals, and in general CEO turnover is sensitive to firm performance for singles but not for duals. Finally, when duals unify their share classes, statistically and economically significant value gains occur. Collectively, our results suggest that the governance associated with dual-class equity influences the pricing of duals.

ISB Creiators:
ISB Creators
Thirumalai, R S
Item Type: Article
Uncontrolled Keywords: Low Stock, IPO
Subjects: Business and Management
Depositing User: Veeramani R
Date Deposited: 01 Nov 2014 16:54
Last Modified: 02 Nov 2014 05:07
URI: http://eprints.exchange.isb.edu/id/eprint/118
Publisher URL: http://dx.doi.org./10.1016/j.jacceco.2007.07.002
Publisher OA policy: http://www.sherpa.ac.uk/romeo/issn/0165-4101/
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