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General Equilibrium Effects of the Adoption of a Dual-Class Share Structure by an Innovative Firm in Korea

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  • Jung Joo La

Abstract

This study examines the general equilibrium effects of the adoption of a dual-class share structure by an innovative firm in Korea. In contrast to previous studies, which are performed from a microeconomic perspective and focus on empirical analyses, this study is performed from a macroeconomic perspective and uses a theoretical approach based on a dynamic general equilibrium model. The calibrated results obtained using data from Korea show that the adoption of a dual-class share structure by an innovative firm increases real gross domestic product, total real consumption, social welfare, and total innovation ability by 0.63%, 1.23%, 1.23%, and 2.22%, respectively, but decreases the probability of failure to defend management rights by 6.44%. In contrast, the adoption of a dual-class share structure by a non-innovative firm has a much weaker effect because a non-innovative firm does not invest in innovation.

Suggested Citation

  • Jung Joo La, 2024. "General Equilibrium Effects of the Adoption of a Dual-Class Share Structure by an Innovative Firm in Korea," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 60(8), pages 1658-1669, June.
    • Handle: RePEc:mes:emfitr:v:60:y:2024:i:8:p:1658-1669
    DOI: 10.1080/1540496X.2023.2284312
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