Research On The Influence Of Dual-class Stock Structure On Corporate Governance

In recent years,the development of the capital market has made great achievements,and the corporate governance system has become increasingly important with the development of the capital market.More and more companies choose to go public to raise money,however,this is at the cost of dilution of control."One share,one vote" structure can no longer meet the needs of development of enterprises at this stage,especially those science and technology-based companies.This explains why there are constantly large Internet companies go public with a dual-class stock structure.After a series of companies like JD,Alibaba and Baidu went public oversea,China's capital market decided to allow for firms to take dual-class stock structure in Hongkong since April,2018.This ignited the exploration of dual-class stock structure in China,and Xiaomi Group became the first enterprise to adopt this structure for listing in the domestic capital market.Currently,China is in the initial stage of exploring the dual-class stock structure and this paper studies the impact of dual-class stock structure on corporate governance in order to provide theoretical reference and promote the structure to better serve the capital market.Our paper takes Xiaomi Group as our main research topic.We first introduce the concept and characteristics of dual-class stock structure,the impact of share structure on corporate governance as well as the theoretical basis of corporate governance.Secondly,we introduce the background information of our case companies,including those mainland enterprises listed with dual-class stock structure and the profile of Xiaomi Group.After that,we conduct the case analysis to sort out the changes in the shareholdings of various investors and controllers of Xiaomi before and after the listing.We analyzed the specific impact of dual-class stock structure on the governance of Xiaomi Group from the aspects of control of founders,board governance mechanism,agency costs,regulatory mechanism,rights and interests of minority shareholders and corporate governance performance,which lead us to our final conclusion that dual-class stock structure has both positive and negative impacts on the corporate governance of Xiaomi Group.The positive sides include ensuring the control of the founders,strengthening the stability of talents,improving the efficiency of decision making,and facilitating the long-term development of the company.The negative sides include the poor information transparency within the management,infringing on the decision-making rights of minority shareholders,and weakening the role of the regulatory mechanism.Base on this,we provide our policy advisement: improving the protection system of minority shareholders' interests,improving the transparency of information disclosure,and strengthening the related regulatory mechanism.