The Life Cycle of Dual-Class Firm Valuation

Martijn Cremers, Beni Lauterbach, Anete Pajuste

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

We examine U.S. dual- and single-class firms from 1980 to 2019 and document their valuation differences over their corporate life cycle. At the IPO, dual-class firms have higher mean valuations than do single-class firms, and some evidence indicates that this premium may emanate from dual-class firm founders’ unique vision and leadership skills. As firms age, the valuation premium of dual-class firms tends to dissipate, possibly because dual-class agency problems increase due to a gradual widening of the wedge (the difference between insider voting and cash flow rights) in the post-IPO years.

Original languageEnglish
Pages (from-to)459-493
Number of pages35
JournalReview of Corporate Finance Studies
Volume13
Issue number2
DOIs
StatePublished - 1 May 2024

Bibliographical note

Publisher Copyright:
© The Author(s) 2022. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved.

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