Research On The Effect Of Dual-Class Share Structure In Technical Innovation Enterprises

As a special equity structure,the dual-class share structure is a means of effectively controlling the company by separating cash flow and control rights,allowing founders to keep control as their company grow,and formulating and implementing long-term development strategies for the company.It is commonly seen in science and innovation enterprises.Previously,China had a conservative wait-and-see attitude towards the dual-class share structure system,leading to many excellent companies such as Alibaba,JD.com,and Meituan listing in the United States in order to retain control of the founder team,which undoubtedly represents a huge loss for the domestic capital market.Since 2018,the domestic capital market has gradually relaxed the restrictions on listing with a dual-class share structure,allowing science and innovation enterprises to implement a dual-class share structure listing.Since the domestic listing of the first stock,UCloud,with different rights for the same stock,more and more scientific and innovative enterprises applying a dual-class share structure have been listed in China.As an important part of corporate governance,it is increasingly important to study the dualclass share structure for corporate governance,follow-up effects,existing risks,and corresponding preventive measures.This article uses the case study method to select Huiyu Pharmaceutical,a science and technology innovation board company listed with a dual-class share structure,as the case study object.Based on summarizing previous research results on the dualclass share structure theory,as well as the current corporate governance evaluation system and financial analysis framework,the research and analysis framework of this article is determined.Firstly,a brief introduction to Huiyu Pharmaceutical is given,followed by an analysis of the motivation for Huiyu Pharmaceutical to implement the dual-class share structure.After reaching relevant conclusions,the impact of the implementation of the dual-class share structure is analyzed in detail from four perspectives:internal governance,market performance,financial performance,and innovation ability.A comparative analysis of market performance and financial performance is conducted using Eastonpharma as a comparable company.Finally,it is concluded that the implementation of the dual-class share structure of Huiyu Pharmaceutical has brought a series of positive and negative impacts to the company.Firstly,in terms of internal governance,Huiyu Pharmaceutical has applied a dual-class share structure to ensure the control of founder Ding Zhao,improving the governance efficiency of the board of directors,and ensuring its independence;Huiyu Pharmaceutical’s management expense rate has decreased significantly,the total asset turnover rate has decreased,and the agency cost performance is stable;Huiyu Pharmaceutical maintains a good level of information disclosure and establishes a good corporate image;However,the dual-class share structure not only improves the efficiency of corporate governance and decision-making,but also brings problems such as the possible infringement of the rights and interests of small and mediumsized shareholders.In terms of market performance,due to the decline in the market position of the company’s main products,the dual-class share structure has not played a good role in promoting Huiyu Pharmaceutical.Although the excess cumulative yield has maintained an upward trend and is higher than that of comparable companies,it is still negative.In terms of financial performance,after the application of the dual-class share structure,Huiyu Pharmaceutical’s debt paying ability has improved,its profitability is relatively stable,and its operating ability has been affected to some extent,mainly due to the decline in inventory turnover rate.Finally,there is the ability to innovate.The founders’ control rights are guaranteed,and they can focus on the company’s development.They lead the company’s research and development team to focus on drug research and technological innovation,promoting the healthy development of the company.Finally,this article proposes corresponding suggestions for the negative impact of the dual-class share structure on Huiyu Pharmaceutical,hoping to help Huiyu Pharmaceutical reduce the negative impact and provide some reference for future science and innovation enterprises that plan to adopt this share structure.