The Eeffect Of Dual-Class Shares Structure On Corporate Value Of American China-Concept Stocks

With Alibaba successfully listed on the New York Stock Exchange in the United States, dual-class shares structure come into people’s horizons with eye-catching way. Recently American China-concept stocks who are splitting their VIE structures begin to come back to Chinese stock market, which has lifted a heated discussion about whether we should retain their dual-class shares structure.Therefore, it has become a meaningful and interesting question that how dual-class shares structure influence the corporate value of American China-concept stocks.Generally speaking, founders or the management can obtain the company’s absolute control power by setting dual-class shares structure, which can bring private benefits for them.And it can affect their behavior of company’s founders or the management. In addition, setting dual-class shares structure can affect investors’ judgments for the company, which lead to the volatility of the company’s stock price, as well as the change of the market value. Moreover, dual-class shares structure harms the interests of small and medium-sized investors, which can produce a higher agency cost. Therefore, relying on the agency theory, private benefits of control related theory, tobin Q theory and efficient market theory, using the theory method combined with empirical research, we try to analyze that how dual-class shares structure influence specifically the corporate value of American China-concept stocksThis paper firstly chooses the binary discrete model to make empirical research about the reasons why choose dual-class shares structure. The study result shows that American China-concept stocks who choose dual-class shares structure have significant positive relationship with companys’sizes, and have negative relationship with companys’ management conditions.But the relationship between choosing dual-class shares structure and opportunities of companys’valuable investments is not significant. Then based on the choosing reason, taking the tobin Q as the proxy variable of the company’s value, this paper makes panel model to empirical research. And results show that the relationship between tobin Q of American China-concept stocks and the choice of dual-class shares structure is significant negative, which suggests that to a certain extent dual-class shares structure can reduce the value of the company.What’s more, our study in this paper not only helps us to understand the reasons why companys choose dual-class shares structure, but also helps us to analyze the effect of the corporate value of American China-concept stocks when choosing dual-class shares structure, which is advantageous to the relevant government departments to discuss whether we should reserve dual-class shares structure.Also it helps investors can know more about American China-concept stocks and dual-class shares structure, as well as help relevant companies to strengthen governance issues.