Founders and the decision of Chinese dual-class IPOs in the U.S

Xiaodan Li, Yang Jiao, Min-Teh Yu () and Yang Zhao

Pacific-Basin Finance Journal, 2019, vol. 57, issue C

Abstract: This study collects data on IPOs of U.S.-listed Chinese companies from 2000 to 2015 and explores why some of these firms deviate from the one share-one vote regime when going public. Our results identify “founder's influence” and “e-businesses” as two key determinants of dual-class IPOs that have not been found in the previous literature. The significance of the effect of fundraising for long-term investments as found in the literature and this study disappears when comparing these two new determinants together. We also provide empirical evidence that managers adopt a dual-class share structure in order to retain control and to diversify the risk of their own wealth, and that there is no significant performance difference between dual-class firms and single-class firms after IPOs.

Keywords: Dual-class shares; Founder; U.S.-listed Chinese companies; IPO (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:57:y:2019:i:c:s0927538x1830088x

DOI: 10.1016/j.pacfin.2018.04.009

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