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arXiv · 2608.25972

The Dynamic Trade-Off of Dual-Class Shares

Hyunseob Kim·Doron Levit·Roni Michaely
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Abstract

Dual-class shares allocate control to founders whose firm-specific investments drive firm value but separate control from ownership, raising agency costs. We analyze this trade-off dynamically. Using new data on US dual-class firms spanning 52 years and difference-in-differences designs, we show that valuations rise following dual-class recapitalizations but decline over time, whereas innovative output increases persistently. These effects are concentrated in industries with greater firm-specific investments. We find corresponding results for stock unifications. Investment by mature dual-class firms is less sensitive to opportunities and voting premia increase with maturity. Our results support dynamic treatment effects and yield new policy implications.

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Hyunseob Kim, Doron Levit, Roni Michaely. 2026-08-26. The Dynamic Trade-Off of Dual-Class Shares. https://arxiv.org/abs/2608.25972

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