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Dual-class share structures and financial outcomes in high-tech firms: evidence from US-listed China concept stocks

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  • Zhujia Yin
  • Luqing Shi
  • Yiwei Wu
  • Jiejin Xia

Abstract

This study investigates the effect of dual-class share structures on high-tech firms’ financial outcomes. Using a unique and hand-collected high-tech sample of China concept stocks that launched their IPOs on the US stock exchange between 2000 and 2018, we find that high-tech firms with dual-class share structures have better financial performance than propensity-matched single-class firms. Channels for the financial promotion effect of dual-class share structure include increasing debt financing and promoting R&D innovation. Heterogeneity tests show that this effect is more pronounced for high-tech firms with larger boards, higher information transparency, and the simultaneous implementation of sunset clauses. Our findings can be useful references for the practical application of dual-class shares in Chinese capital markets.

Suggested Citation

  • Zhujia Yin & Luqing Shi & Yiwei Wu & Jiejin Xia, 2024. "Dual-class share structures and financial outcomes in high-tech firms: evidence from US-listed China concept stocks," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 22(4), pages 509-530, October.
    • Handle: RePEc:taf:jocebs:v:22:y:2024:i:4:p:509-530
    DOI: 10.1080/14765284.2024.2396268
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