The Choose Motivation And Effect Evaluation Of The Dual-Class Share Structure Of TME

In the early 21 st century,driven by the wave of the Internet,dual-class share structure began to rise.Most companies that choose this type of structure have high growth potential.In order to meet the rapid growth of enterprises,they often have high financing demand,but equity financing may lead to the risk of losing control.So the founders,parent companies or holding companies,extended families or private equity investors who control these companies tend to let enterprises listed in the form of dual-class shares that retain control while reclaiming the benefits of a public listing.Dual share structure has been controversial since its birth,because the dual share structure is different from the system of one share and one vote,which is regarded as a challenge to the Coase theory of property rights.Deviation from the principle of one share and one vote may increase the agency cost and raise the risk of big shareholders infringing on the interests of minority shareholders.In order to avoid the economic losses caused by the listing of outstanding enterprises abroad,HKEX,SSE STAR Market and Beijing Stock Exchange respectively opened the dual-class share structure in 2018,2019 and 2020.However,based on the problem of agency costs,how to coordinate the efficiency and fairness of dual-class share structure has become the subject of academic discussion.In order to understand the motivation of dual-class share structure selection,the transmission path and effect of corporate governance,this thesis takes TME as a case study.TME was listed on the New York Stock Exchange in 2018,and then listed on the Hong Kong Stock Exchange in 2022 by way of listing by introduction.Moreover,TME is an enterprise listed with dual-share structure of parent company or holding company.Through analyzing this enterprise,this thesis can draw conclusions that are different from the types of founders.It also provides some suggestions for improving the rules and regulations of special voting rights and the enterprises that plan to use dual-class share structure to go public.This thesis takes TME as the research object,starts from collecting and sorting out the relevant research literature on the dual-class share structure at home and abroad,studies and analyzes the relevant theoretical models,lists the main motivation and transmission path of the dual-class share structure,and analyzes the effect of TME’s implementation of the dual-class share structure through the specific indicators of the CCGINK,thus drawing conclusions and inspiration.This article mainly includes five chapters.The main purpose of the first chapter is to draw out the theme,sort out the literature and sort out the basic framework of this article.The second chapter summarizes the relevant theories,expounds the main contents of the dualclass share structure,the motivation and corresponding effect evaluation methods for enterprises to choose the dual-class share structure,and reviews the basic theories involved in this thesis.The third chapter introduces the company overview of TME and the establishment of the dual equity structure.The fourth chapter starts the case analysis,and concludes that TME implements the dual equity structure to prevent hostile takeover by competitors and potential entrants,ensure the long-term development of the enterprise,and obtain the heterogeneous capital invested by the parent company.From the perspective of group governance,this thesis analyzes the transmission path of TME’s parent company’s control over corporate governance under the dual-class share structure and the effectiveness of the risk control measures.After that,according to the effect evaluation method summarized in the previous article,this thesis analyzes TME’s governance risk and economic effect,and evaluates the specific effect of TME’s implementation of the dual equity structure.Combining with the case of TME’s dual-class share structure,this thesis draws the following conclusions through analysis: First,the setting of special voting rights is related to the bargaining power of enterprises;Second,dual-class share structure is beneficial for enterprises to realize cross-border operation;Third,dual-class share structure has certain governance risks.In order to prevent the governance risks of companies with dual-class share structure of parent company and holding company,this thesis puts forward the following suggestions: First,the absolute control of the parent company over the subsidiary can improve the operating efficiency of the subsidiary,but it will also enhance the governance risks.Therefore,it is prudent to allow the dual-class share structure of the parent company and holding company to be listed.Secondly,since most of the dual-class share structure listed companies are high-tech enterprises with a high degree of digitalization,the risk early warning system can be established to balance the efficiency of decision-making and risk management.Finally,it is difficult for enterprises with dual share structure of parent company or holding company to complete the withdrawal of dual share structure through sunset clause of death type or equity transfer type,so the scope of application of special voting rights should be limited,and sunrise clause and performance sunset clause should be introduced to improve the withdrawal mechanism.