Asian Corporate Governance—and the Case of Dual-Class Shares: CARE Conference &7C Hong Kong Polytechnic University &7C June 9, 2014

type="main"> The case of the Alibaba IPO illustrates the divergence of corporate governance standards between the United States and many other markets, and reopens the debate on the one-share one-vote principle. Since corporate governance standards develop in ways that reflect the history and legal and political environments of different countries, we should not expect to see a global convergence of these standards—nor is it generally desirable to transplant policies from one market to another without understanding their historical backgrounds. Nevertheless, the U.S. approach to regulation raises the concern that competition among exchanges will cause issuers to “shop around” and tempt the exchanges to relax their standards in a race to the bottom. While market participants and regulators outside of the U.S. debate whether and how to modify the one-share, one-vote rule, they face challenges in coming up with new rules that strike the right balance between effective corporate governance and market development.