Research On The Effectiveness Of Corporate Governance Of Dual Shareholding Structure In Technological Innovation Enterprises

In recent years,the dual equity structure has attracted the attention of a wide range of companies with its special design.In fact,the dual shareholding structure has become a very important shareholding structure in the United States.In simple terms,a dual shareholding structure divides the company’s shares into A shares and B shares,which have the same form of ownership but completely different voting rights,making it easier for the controlling shareholder with higher voting rights to control the company.The founder of a company plays an integral role from the establishment to the growth of the company.Often,companies choose to raise capital during the start-up phase due to a lack of financial support,but the founders lose their voice afterwards due to the dilution of their shareholding.However,the dual shareholding structure is a good balance between the two,i.e.it effectively solves the financing problem on the one hand,and ensures that the founders do not lose control of the company due to the financing behavior on the other hand.As the Hong Kong Stock Exchange and the Science and Technology Venture Exchange have allowed the listing of companies with dual equity structures in the previous years,more and more companies have started to choose to implement this structure.In such a context,it is significant to discuss in depth how listed companies implementing dual shareholding structure can improve their governance capacity and governance efficiency while maintaining the control of the founders.Based on the perusal of domestic and international literature,this paper draws on principal-agent theory,control theory,stakeholder theory and shareholder heterogeneity theory,and elaborates on the above theories to lay the foundation for the following study;through a case study of Xiaomi,which was listed in Hong Kong in 2018,this paper understands its development trajectory as well as its financing method,and analyzes the value of human capital,prevention of hostile takeover,shareholder heterogeneity etc.,the reasons for Xiaomi Group’s choice of dual equity structure for listing are analyzed.Then,we analyze the effects of implementation in terms of internal management structure and operation mechanism,strategy selection,and five major financial capabilities,and conclude that the dual shareholding structure is actually a double-edged sword,with positive and negative effects,including the implementation of corporate culture,ensuring the control of the founders over the company and thus strengthening the human capital,improving the corporate governance performance and thus enhancing the long-term development of the company.The negative effects are mainly the non-transparent internal governance of the management,which leads to increased risks for small and medium shareholders,weakened regulatory functions,and the personal image of the founders,which also affects the development of the company.The innovation of this paper is to evaluate the effect of the implementation of Xiaomi’s dual equity structure from both financial and non-financial perspectives.Currently,domestic scholars mainly discuss the effects of the implementation of dual equity structure on the internal and external capital markets of companies from three aspects,namely,malicious mergers and acquisitions,costs associated with agency problems between owners and management,and the maintenance of the interests of public investors,while there is a lack of specific studies on why science and technology-based companies have implemented a dual equity system and the actual effects after the implementation.This paper examines both the introduction of dual equity system and the implementation effect of Xiaomi,with a view to providing empirical reference for the introduction of dual equity system in China’s science and technology-based companies.