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Dual-Class Firms: Evidence from IPOs of Chinese Firms Cross-Listed on US Exchanges

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  • Abdullah
  • Zhou Jia'nan
  • Muhammad Hashim Shah

Abstract

We compare Chinese single with dual-class firms cross-listed on US exchanges. We find that dual-class firms are larger in terms of assets and sales, possess ownership concentration, and have higher institutional ownership. Chinese firms in IT industry are especially likely to use dual-class structure. We find that, contrary to the literature, dual-class firms underprice 30.42% more and firm underprices less when governance practices are adequate. Insiders need to bear underpricing cost for retaining control. Interestingly, we find that dual-class firms hire more independent directors to show commitment toward shareholder’s rights but control them through CEO Chairman Duality and superior voting rights.

Suggested Citation

  • Abdullah & Zhou Jia'nan & Muhammad Hashim Shah, 2017. "Dual-Class Firms: Evidence from IPOs of Chinese Firms Cross-Listed on US Exchanges," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(7), pages 1691-1704, July.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:7:p:1691-1704
    DOI: 10.1080/1540496X.2017.1307103
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