Research On The Motivation And Performance Of Xiaomi Group’s IPO With Dual-class Share Structure

Since the 21 st century,China’s economy has experienced rapid development,and technological innovation-oriented enterprises have been rising.The professionalism and technicality of the founders play a crucial role in the development of science-based companies,which are fundamentally different from traditional companies.In order to meet the continuous capital demand,the founders inevitably face equity dilution or even a hostile takeover of the company,which becomes a hidden danger for the company’s sustainable development.The emergence of a dual-class share structure effectively solves this problem.In the dual-class share structure,the company’s cash flow right and control right are separated,and the shareholders holding special voting rights can use fewer shares to achieve absolute control of the enterprise,to prevent the dilution of equity caused by listing financing.Before 2018,China banned the IPO of dual-class share structure,which led many domestic science and technology companies to go overseas for listing.After the introduction of the dual-class share structure by HKEX,Xiaomi Group became the first company to adopt such a shareholding structure for its IPO.Firstly,the existing literature and related theories of dual-class share structure are reviewed.Secondly,it combs the status quo of ipos of companies with dual-class share structure in Hong Kong and mainland markets.Then,taking Xiaomi Group as a case study,the motivation of adopting a dual-class share structure is analyzed systematically.Finally,on the basis of relevant theories,indicators are selected from three dimensions of corporate governance,risk resistance ability and management ability to build a performance evaluation index system,respectively from the perspective of vertical and horizontal comparison to study the performance of Xiaomi Group IPO with dual-class share structure,and compare the performance difference between companies with dual-class share structure IPO and companies with ordinary shareholding structures IPO.Through analysis and research,this thesis draws the following conclusions: the motivation for Xiaomi Group to adopt dual-class share structure is mainly to meet the founder’s demand for stable control,so as to maintain the strategic layout of the founder team and realize the long-term development of the company.In terms of performance,under the leadership of the founder team,Xiaomi Group,with a dual-class share structure,has improved its corporate governance and to some extent suppressed agency costs;The company’s operating ability fluctuates due to the impact of strategic planning,but the overall growth is still compared to before.In addition,in comparison with the performance of IPOs with ordinary shareholding structures,it was found that the dual-class share structure is superior to companies with ordinary shareholding structures in terms of the reduction of agency costs and the stabilization of financial risks;while for short-term operating performance,the difference in impact brought by these two shareholding structures is not significant,and the long-term operating ability remains to be seen.