Research On The Influence Of Dual Equity Structure On Corporate Governance

Over the past few years,China’s Internet industry has seen a swift expansion,and the development of Internet enterprises cannot be separated from adequate cash support.Many Internet enterprises obtain resources through angel investment,thus promoting the rapid development of enterprises.The dual equity structure is a special equity structure,which has many advantages.It can effectively prevent enterprises from being acquired maliciously and obtain capital investment at the same time,reduce the short-term income preference of external investors,and lay the foundation for the healthy development of enterprises.China’s Science and Technology Innovation board permitted science or technology enterprises to be listed through a dual equity structure in 2019.The dual equity structure was widely concerned by all circles,driving the diversified development of China’s capital market.As of February 2022,there are a total of 5 enterprises listed with dual equity structure in China.From the perspective of time,China implemented the dual ownership structure later.In recent years,China’s capital market has gradually relaxed the restrictions on the dual ownership structure.Based on this,it is very necessary to discuss the advantages and disadvantages of dual ownership structure from the perspective of corporate governance,and analyze how listed companies improve corporate governance through such structure.This dissertation takes Pinduoduo as an example to study the impact and effect of dual ownership structure on corporate governance.Pinduoduo is an Internet enterprise rising in recent years.It has a relatively short development time and a fast development speed,and has great research value.The first part of the article: conscientiously summarizes the relevant concepts,specifically clarifies the relevant concepts of corporate governance and dual ownership structure.Based on the above theories,we will specifically explore how the dual ownership structure affects corporate governance.Then,based on the financial and non-financial data disclosed by Pinduoduo from 2016 to 2021 and the company’s articles of association,the data of a number of Internet enterprises were selected to calculate the industry average,and the comprehensive horizontal and vertical comparison method was used to analyze the corporate governance framework and mechanisms pre and post adopotion of dual-class share structure.The changes and effects of Pinduoduo’s corporate governance structure and mechanism are further supported by the external performance of Pinduoduo under the dual share structure.Through research and analysis,this paper finds that Pinduoduo has improved its corporate governance through the implementation of dual-class share structure.In terms of corporate governance structure,while solving financing needs,the control right is concentrated in the hands of the founding team,so as to avoid the interference of investors in the operation and management of the company,ensure that the founders can plan the development of the company from a long-term perspective,and reduce the principle-agency cost through the founder concurrently serving as chairman and CEO.In terms of corporate governance mechanism,Pinduoduo has adjusted the power distribution and internal structure of its decision-making body,and fully optimized its decision-making mechanism,supervision and restraint mechanism.Although the dual-class share structure also brings potential risks to the corporate governance,the system has a positive effect on its corporate governance on the whole,which largely meets the practical needs of similar Internet enterprises of Pinduoduo.