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SUMMARY:THE LIFE CYCLE OF DUAL CLASS FIRM VALUATION - Anete Pajuste\, Sto
 ckholm School of Economics
DTSTART:20191105T130000Z
DTEND:20191105T150000Z
UID:TALK130183@talks.cam.ac.uk
CONTACT:Emily Brown
DESCRIPTION:We examine an extensive matched sample of US dual and single c
 lass firms in 1980-2017 from the time of their IPO\, and document that the
  valuation difference between dual and single class firms varies over thei
 r life cycle. On average\, around the time of the IPO\, dual class firms h
 ave higher valuations than single class firms. Over time\, this valuation 
 premium tends to dissipate\, whereas the difference between voting and equ
 ity stakes of the controlling shareholders of dual class firms (the "wedge
 ") tends to increase. We also observe the rise in the fraction of dual cla
 ss IPOs in the 21st century is accompanied by a larger mean initial premiu
 m and a smaller mean long run discount than in the 20th century. Our resul
 ts provide support for the availability of dual class structures at the IP
 O as well as the desirability of age based sunset provisions for such stru
 ctures.
LOCATION:W2.02\, Cambridge Judge Business School
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