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The purpose of this paper is to critically review the relevant literature from the perspective of dual-class firms and to provide suggestions for future research on dual-class firms, and on methodological issues that should be addressed in such research.

The research design consists of three parts: an introduction to dual-class firms (motivations for; firm life cycle effects) in Part 1; concerns with firms with such share class structures (valuation; governance; accounting and corporate policy issues) in Part 2; and some solutions or ways to accommodate the trade-offs involved with such share class structures (retention arguments; index/exchange exclusions; contractual provisions; external monitoring) in Part 3. Throughout the paper, the authors provide some critiques of existing studies, particularly from a methodological perspective, the authors’ opinion on the state of the literature and suggestions for future areas of research.

While motivations for the use of dual-class voting structures include flexibility so that the idiosyncratic vision of their entrepreneurs/founders can be pursued in a less encumbered fashion, greater innovation and long-term managerial orientation, there are many possible costs (e.g. underinvestment and managerial entrenchment) to this ownership structure. Nevertheless, the authors believe that such firms should have provisions in place that facilitate a reversion to a single-class structure longer term when such firms have become more mature, less dependent on the idiosyncratic vision of the entrepreneurs/founders at IPO and have attracted more managerial talent.

The literature arrives at no consensus on the benefits/drawbacks of this type of share ownership structure which means that many topics of research require further academic examination. The authors provide suggested directions for such future enquiries.

The purpose of this paper is to explain whether the level of managerial quality and growth opportunities influences the operating and return performance between single and dual class IPOs.

The sample includes 281 initial public offerings under a dual class share structure. This paper measures managerial ability using a score method design produced by (Demerjian et al., 2012). This paper follows (Chemmanur et al., 2011) in measuring post-IPO operating performance between dual and single-class firms. This paper follows Lyon et al. (1999) and Chemmanur et al. (2011) in measuring long-term post-IPO buy-and-hold return performance. This paper employs two measures of growth/investment using Tobin’s q and expenditures such as capital, research and development, and selling, general and administrative scaled to total assets (Daniel et al., 2016).

Firms with high-quality managers experience more underpricing than low-quality managers. Likewise, dual class firms of all manager and growth types hold less cash and leverage. Using Tobin’s q as a proxy for growth, dual class firms experience higher post-IPO operating performance regardless of managerial quality. Furthermore, the findings indicate minimal evidence that dual class firms underperform single-class IPOs, lending minimal support for the managerial entrenchment hypothesis.

This paper is the first to partition dual and single-class IPOs based on managerial quality and growth opportunities to test long-term differences in operating and return performance.

The purpose of this paper is to provide new evidence on the choice of performance measures used in dual-class firms to incentivize CEOs.

This paper uses coarsened exact matching and propensity score matching to match the dual-class firm sample with a control group of single-class firms. This study uses matching estimators to provide an analysis of how a dual-class structure affects the design of performance measures in performance-based stock awards. In addition, regression models are used to investigate the effect of a dual-class structure on performance measure choices.

This paper finds that market-based metrics are less likely to be used by dual-class firms relative to single-class firms. In addition, peer-based measures are much less common for dual-class than single-class firms. This study also finds that the length of the CEO’s performance evaluation period does not differ between dual-class and single-class firms.

This paper attempts to investigate the choice of performance measures to find out the extent to which the board of directors focuses CEO efforts on firms’ long-term versus short-term objectives.

The findings reveal the relationships between the dual-class stock structure and the contractual features of CEO performance-based stock awards, provide empirical evidence for the company’s compensation committee and provide implications for the evolving practices of performance measures regarding CEO stock compensation. The findings are also useful to regulators, compensation consultants and firms pursuing efficient design of executive compensation.

This paper is among the first to study the determinants of compensation contracts. Second, prior literature seldom controls for CEO stock ownership, but this study matches dual-class firms to a control group of single-class firms that are similar in terms of CEO stock ownership and other important firm characteristics. Finally, these findings suggest that dual-class firms shield their executives from short-term market pressures and design stock compensation contracts that deemphasize volatile stock prices.

The purpose of this paper is to examine what is weighted more by the investors when valuing a dual-class firm’s stock – greater agency costs or better accrual quality of the dual-class firm in contrast to the single-class firm.

Using the financial data of firms issuing multiple classes of stock (hereafter dual-class firms) and firms issuing single class of stock (hereafter single-class firms), the authors measure the effect of firm’s ownership structure (dual class versus single class) on the earnings response coefficients (ERCs) of prior, current and future period earnings.

The authors find that investors care more about agency costs than the quality of accruals in evaluating the earnings of dual-class firms. Specifically, the authors find that current annual returns of the firm are negatively associated with dual-class ownership structure and that earnings informativeness and predictability are decreasing in dual-class ownership of the firm as reflected in decreasing ERCs.

This study adds to prior literature on dual-class ownership which reports greater agency costs and better accrual quality at dual-class firms in contrast to single-class firms. This study contributes to the literature on earnings informativeness and predictability by evaluating the effect of ownership structure on the ERCs of the firm. Investors should be careful when valuing a dual-class firm and should consider agency costs in addition to accrual quality of reported earnings at such firms.

Reverses the traditional approach of defining classes or status groups before investigating patterns of social interaction by using patterns of interaction between more basic units such as occupational groups to determine the nature of stratification order. Outlines the theoretical basis and compares this to other methods before giving examples of applications.

The purpose of this study is to explain the poor informativeness of earnings in dual-class firms by examining the quality of earnings and the information environment.

The earnings informativeness, earnings quality and information environment of dual-class firms are compared with a matched sample of single-class firms. The authors have performed the returns-earnings association tests, examine the quality of earnings by using proxies for discretionary accruals, and examine the information environment by employing four empirical constructs: the analyst forecast dispersion, absolute forecast errors, Amihud’s (2002) illiquidity measure, and the bid-ask spread.

The results show that the quality of earnings is better while the quality of the information environment is worse in dual-class firms compared to single-class firms. Overall, the results suggest that an inferior information environment is a plausible explanation for the low informativeness of dual-class firms’ earnings.

The results provide empirical support for Dechow et al. (2010) that the use of the earnings-returns association measure to draw conclusions about the quality of earnings is not appropriate in the presence of a poor information environment.

This is the first study to empirically show that low earnings informativeness in dual-class firms can be explained by the inferior quality of the information environment.

The purpose of this paper is to study class awareness in Iceland in the wake of a national economic collapse.

This comparatively oriented case study uses new survey data, secondary data on Iceland and 2005 World Values Survey data. The data are analyzed using a synthesis of Weber's theory of class and reference group theory.

Contrary to conventional wisdom, Icelanders are class‐aware. Most recognize and understand class terms, and are willing to assign themselves to a class. Consistent with Weber, Icelanders have fairly strong awareness of their class position, evidenced by a strong relationship between subjective class and economic class, on the one hand, and subjective class and class indicators, on the other. Consistent with reference group theory, a subjective “middle class” tendency is revealed across the class structure. Icelanders also have more of a “middle class” view of their class position and see it, on average, as higher than people in most other countries.

No systematic study of class awareness in Iceland has been carried out since the 1970s. What is more, cross‐national studies have never fielded subjective class questions in Iceland. This paper begins to rectify this omission. Lastly, a linkage of individualization and reference group processes is proposed to broaden the theoretical basis of studies of class awareness.

The purpose of this paper is to test if relative asset purchase values (RAPVs) differ between single- and dual-class purchasers (not) differentiated by family ownership for Canadian firms.

The paper uses multivariate regressions and 2SLS estimations of simultaneous equations models with both continuous and dichotomous endogenous variables. Data on share structures and family involvements are hand collected.

RAPVs for dual-class purchasers are significantly different (larger) than their single-class counterparts only for family-controlled samples. Larger RAPVs for dual-class purchases are associated with higher degrees of dual-class structures, higher family ownerships and with boards with no more than one family member.

RAPV is important because of its common use as a primary determinant of the wealth effects of M&As, its use as an exchange-rate proxy in two-stage regressions used to determine the amount of abnormal returns attributable to short selling activity around M&A announcements, and its use as a channel for conveying information about deal complexity, seller’s bargaining power, additional monitoring benefits from purchase and/or greater challenges in incorporating a purchase into existing assets. Larger sample size would facilitate more differentiated examinations.

Findings imply that dual-class share structures assist family shareholders in elevating their control over corporate decisions involving asset purchases.

This paper furthers the authors’ knowledge about the effects of agency issues on corporate decisions.

It provides an extension and robustness test of the US evidence for asset purchases by providing evidence for Canada given its greater preponderance of families as the ultimate controlling shareholders, restricted or subordinated voting shares issued and pyramidal structures.

The purpose of this study is to focus on changes in stratification structures in a rural community of the Punjab, Pakistan. The village was previously studied by Eglar suggesting strong caste structure. Keeping her study as a base, the authors attempt to measure structural changes that have occurred from the 1960s through 2008.

Data were drawn from a probability sample survey which was conducted in the village. Systematic sampling technique was used for selection of the respondents. An interview schedule was developed to obtain information from persons, age 55+ years. The older age group was expected to have observed changes over the period of time.

The findings are based on trend and regression analyses. Source of income is an indicator of shift from caste to class structure. The results show that stratification structure of the village has changed since 1960. Changes in traditional stratification structure emerged in the 1970s and became prominent in the 1990s and onwards. These changes occurred mainly due to economic factors, international migration and education. It is found that the class system has partially replaced the caste based stratification in the village.

Public policies can be designed to promote or resist the changes that have occurred due to the identified causal factors.

The present study is expected to throw light on factors which gave rise to the emergence of the class system in rural areas of Pakistan.

This paper presents a systematic XML Schema design approach which conceptually captures semantics of the problem domain at conceptual level and represents such semantics in XML Schema at schema level. At the conceptual level, objects, their inter‐relationships and constraints are semantically powered by object‐oriented models. At the schema level, these conceptual semantics are comprehensively represented in textbased representation of XML Schema using various schema components and design styles, each of which offers different quality characteristics. Two primary design styles in use are nesting and linking. The nesting design styles are developed based on the choice of schema components and their definition/declaration scopes (global vs. local), whereas the linking design styles use referencing facilities provided by XML Schema and other XML technologies such as XLink and XPointer. With an in‐depth analysis of outstanding problems of existing approaches, the proposed design approach is motivated to help improve the quality and robustness of the XML documents in large‐scale XML‐based applications.