Study On The Effect Of The Implementation Of Xiaomi’s Two-tier Shareholding

In recent years,with the development of the Internet era,a large number of technology-based enterprises have emerged in China that rely on the rise of the Internet.Similar internet enterprises require a large amount of capital in their early development,so most of them choose to go public for financing.However,while capital entry alleviates corporate financing problems,it can also easily lead to the dispersion of company equity and the risk of founders losing control of the company.The dual-class share structure born abroad has become an important means to solve such problems.Prior to 2018,due to considerations such as risk control and imperfect domestic systems,the domestic securities market did not allow domestic companies to list in a form different from the principle of equal rights for the same stock.This has also led to some internet giants in China,such as Baidu and Alibaba,choosing to list overseas.The loss of these high-quality enterprises has prompted the domestic capital market to rethink and formulate listing rules.In 2018,the Hong Kong Stock Exchange revised its listing rules to allow companies to list in Hong Kong in the form of the same share with different rights,In this context,Xiaomi Company submitted a listing application to the Hong Kong Stock Exchange.On July 9,2018,Xiaomi became the first domestic enterprise to list on the Hong Kong Stock Exchange with dual-class share structure.This article selects Xiaomi Company as the case object to explore the implementation effects of Xiaomi Company’s dual-class share structure.This article reviews the relevant literature on the dual-class share structure,reviews the historical evolution of its development both domestically and internationally,and applies the theoretical basis of the dual equity structure to elaborate and analyze the overall situation of Xiaomi after its listing with the dual-class share structure.This article takes Xiaomi Company as a case enterprise,first providing an overview of the overall situation and development process of Xiaomi Company;Then analyzed the motivation and specific equity structure of Xiaomi’s dual-class share structure;Finally,by analyzing the agency costs,market reactions,and financial performance changes of Xiaomi before and after its dual-class share structure listing,the specific implementation effects of Xiaomi’s dual equity structure were analyzed,and the potential risks brought by the dual-class share structure were pointed out.Based on the above analysis,This article also puts forward relevant suggestions for optimizing the risk of a dual-class share structure,and points out the inspiration that Xiaomi’s dual-class share structure brings to similar domestic enterprises and the domestic capital market.This article believes that Xiaomi’s adoption of a dual-class share structure for listing is,on the one hand,to obtain financing and ensure the company’s financial needs for development and expansion;At the same time,in order to stabilize the founder’s control over the company and prevent malicious mergers and acquisitions;Another option is to centralize the voting power of enterprises and improve decision-making efficiency.By collecting and analyzing the financial data of Xiaomi Company in the past five years,it can be seen that Xiaomi’s financial situation has been stable after going public with a dual-class share structure,and there have been no significant financial risks.The overall development of the enterprise remains stable and good.The cost of commission and agency has also been well controlled,and the founder of the company firmly holds control of the company.It can be considered that Xiaomi’s listing with a dual-class share structure has basically achieved its original intention of obtaining financing while maintaining the founder’s stable control over the company.I hope that this case study can provide theoretical reference for optimizing the dual-class share structure of Xiaomi,selecting listing plans for domestic technology-based enterprises,and diversifying the future development of the domestic capital market.