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Multi-class Shares around the World: Role of Institutional Investors

Author

Listed:
  • Jiye Ryu

    (Hongik University)

  • Jinhee Kim

    (Hongik University)

Abstract

This study examines multi-class share structures around the world. We use a comprehensive sample of publicly listed firms in 45 countries over the period 2001–2016 and find that institutional investors exhibit strong aversion toward multi-class firms, penalizing them through a valuation discount. The presence of institutional investors correlates with a higher likelihood of share-class unification. These effects are stronger for local (particularly in the US) and actively managed investors. Overall, our research highlights the role of institutional investors in the current debate on banning multi-class stocks from global stock indices.

Suggested Citation

  • Jiye Ryu & Jinhee Kim, 2025. "Multi-class Shares around the World: Role of Institutional Investors," Korean Economic Review, Korean Economic Association, vol. 41, pages 43-85.
    • Handle: RePEc:kea:keappr:ker-20250101-41-1-02
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    File URL: http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-20250101-41-1-02.pdf
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    References listed on IDEAS

    as
    1. Lauterbach, Beni & Pajuste, Anete, 2015. "The long-term valuation effects of voluntary dual class share unifications," Journal of Corporate Finance, Elsevier, vol. 31(C), pages 171-185.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dual-class shares; Institutional ownership; Corporate Governance;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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