Growth opportunities, short-term market pressure, and dual-class share structure

Bradford D. Jordan, Soohyung Kim, Mark H. Liu

Research output: Contribution to journalArticlepeer-review

31 Scopus citations


We test the hypothesis that dual-class shares can help managers focus on the implementation of long-term projects while avoiding short-term market pressure. Consistent with this idea, we find that dual-class firms face lower short-term market pressure (fewer transient or short-term institutional holdings, a lower probability of being taken over, and lower analyst coverage) than propensity-matched single-class firms. Dual-class firms also tend to have more growth opportunities (higher sales growth and R&D intensity). The dual-class share structure increases the market valuation of high growth firms, in contrast to the finding in the literature that dual-class firms trade at lower valuations. To address endogeneity concerns, we evaluate a sample of dual-class share unifications and find that growth opportunities decline while short-term market pressure increases after share unifications.

Original languageEnglish
Pages (from-to)304-328
Number of pages25
JournalJournal of Corporate Finance
StatePublished - Dec 1 2016

Bibliographical note

Publisher Copyright:
© 2016 Elsevier B.V.


  • Cash flow rights
  • Dual class shares
  • R&D expenditure
  • Sales growth
  • Share unification
  • Voting rights

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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