Research On The Application Effect Of Dual-class Shareholding Structure Of U Cloud Company

At present,China is in a period of economic restructuring,and innovation has become the driving force for the new growth of the national economy.Technology-based enterprises have the characteristics of light assets and heavy labor,long R&D cycles,and rapid technological update iterations.Due to the high cost and long duration of debt financing,equity financing has become the first choice for many technology companies.However,while equity financing provides the company with financial convenience,it also brings the risk of losing control rights.The dual-class shareholding structure gives shareholders differentiated voting rights,which is conducive to solving the problems of financing and dilution of control rights.Taking the United States as an example,many western countries allow the implementation of dual-class equity structure,and the dual-class equity system has accumulated rich practical experience abroad.In order to attract the return of high-quality corporate resources,in April 2018,the Hong Kong Stock Exchange relaxed the restrictions on the dual-class share structure,and in 2019,the Science and Technology Innovation Board also launched a pilot exploration of special voting rights arrangements.On January 20,2020,UCloud Technology Co.,Ltd.(hereinafter referred to as UCloud)set up a dual-class share structure and successfully landed on the Shanghai Stock Exchange’s Science and Technology Innovation Board,becoming the "first person to eat crabs" in my country’s A-share market.The dual shareholding structure separates the company’s control rights and cash flow rights,and this special shareholding structure arrangement will have a series of chain reactions on the company’s operation and management.Based on this,this paper takes UCloud as the research object,and combines the theory of principal-agent,control,stakeholder and shareholder heterogeneity,and firstly sorts out the development and application status of dual-class share structure at home and abroad;secondly,it introduces UCloud.The basic situation of the company,including its development history and the composition of the founder team,as well as the equity financing process and the specific content of setting up a domestic and overseas dual-class shareholding structure.It is necessary to choose the motivation of the dual-class share structure;then use the event research method,financial index analysis method,comparative analysis method,etc.to deeply analyze the effects brought by the application of the dual-class share structure,including corporate governance,financial performance and market performance,etc.,and found that the implementation of the dual-class share structure may have a negative impact on the company’s regulatory mechanism and the interests of small and medium shareholders.Finally,the conclusions of the case study are summarized,and corresponding enlightenment is put forward for UCloud companies,technology-based enterprises and regulatory authorities.The research focus of this paper is the application effect of UCloud ’s dual-class share structure.Through the research,it is found that:UCloud chooses the dual-class share structure because technology-based companies need to invest a lot of money in the early stage of growth.The dual-class share structure can not only meet the actual needs of corporate equity financing and stable control of the founding shareholders,but also prevent the company from being maliciously attacked by external capital.At the same time,in order to promote product innovation and ensure the implementation of the company’s long-term development strategy.In terms of corporate governance effect,the founder team has achieved control over the board of directors and senior management by setting up special voting rights,and improved the equity concentration.It was found that the agency cost of UCloud was lower;in terms of financial performance,the solvency of UCloud has been improved after the implementation of the dual-class share structure,and the growth ability and operation ability were better than the industry average.However,due to the long-term development pursued by the founder team The strategy indirectly affects the company’s short-term profits,resulting in a decline in its profitability;in terms of market performance,the short-term market performance of UCloud after listing with a dual-class shareholding structure is good,and the premium effect within 30 trading days is relatively significant.Investors’ willingness to invest in UCloud is higher than that of the other two single-tier equity structure companies.However,the long-term market reaction of UCloud was not satisfactory.Since the 6th trading month,the excess return BHAR of buying and holding has been negative,and the company’s stock price has continued to decline or even fell below the issue price.In addition,the dual-class share structure may lead to the risk of abuse of control by founders,the risk of failure of the regulatory mechanism,and the risk of loss of interests of small and medium shareholders.Therefore,UCloud should improve the information disclosure system,strengthen the protection of the interests of small and medium shareholders,and establish a management performance evaluation mechanism;technology-based enterprises should reasonably set up and use a dual-class share structure to improve scientific and technological research and development strength and profitability;regulatory authorities should enrich "Sunset Clause" content,improve the exit mechanism and optimize the class action system.