Research On The Influence Of Dual-class Share Structure On Enterprise Innovation

The permission for companies to adopt a dual-class share structure for listing on the Science and Technology Innovation Board(STAR Market)signifies the official adoption of this equity structure in China’s A-share market.The dual-class share structure allows high-tech innovative enterprises to secure control by founders or teams while continuously raising funds,thereby enhancing the flexibility and adaptability of the companies.However,it also weakens the effectiveness of internal and external monitoring and checks and balances mechanisms,making it a double-edged sword.As the dual-class share structure further develops in China,studying its impact on corporate governance and exploring ways to leverage its advantages while mitigating risks becomes an important research question.This article selects Chinese concept stocks listed in the United States from 1994 to 2021 as samples and adopts a combination of theoretical analysis and empirical research methods to investigate the influence of the dual-class share structure on corporate innovation and the change of their relationship under different life cycles.The research findings are as follows: First,dual-class share structure throughout the life cycle can promote corporate innovation.Second,the impact of the dual-class share structure on corporate innovation varies at different life cycle stages.During the growth stage,the dual-class share structure can improve managerial decision-making efficiency and facilitate the acquisition of stable investments and resources to support innovation activities,thereby promoting corporate innovation.During the mature stage,driven by personal fulfillment and enhanced reputation value,the management of dual-class share structure companies tends to prioritize long-term value creation over personal interests.The establishment of this equity structure can effectively avoid external shareholders’ interference or short-term behavior,leading to a positive impact outweighing the negative one during this stage.Additionally,benefiting from strong resource foundations and overall advantages,the dual-class share structure in the mature stage promotes corporate innovation more effectively than in the growth stage.During the decline stage,when the overall performance of the company is poor and the motivation for managerial incentives weakens,the management’s innovative spirit declines.The dual-class share structure further strengthens the management’s self-interest motive while weakening the internal and external monitoring and checks and balances mechanisms,resulting in a greater negative impact.Therefore,the dual-class share structure is not conducive to corporate innovation during this stage.Based on the above research conclusions,this article provides relevant recommendations for the government and enterprises to fully leverage the advantages of the dual-class share structure,improve internal and external monitoring and checks and balances mechanisms,and guide companies to choose appropriate equity structures according to different life cycle stages in order to enhance innovation capability and competitiveness.