An Analysis Of The Governance Effect Of Implementing Double-Class Share System In Xiaomi Group

With the rapid development of China’s Internet economy,technological innovation companies like Xiaomi Group have grown rapidly.These scientific and technological innovative enterprises develop rapidly under the tide of The Times,but because of their enterprise characteristics,some management problems float to the surface.Among these problems,lack of capital is the common problem of science and technology innovation enterprises,and also the main problem.Due to the characteristics of the industry,most of these science and innovation enterprises rely on the Internet and belong to the asset-light industry.Therefore,it is difficult to obtain loans by means of asset collateral.So far,the main way to obtain funds is to obtain financing by means of selling equity.But this approach can also lead to a series of subsequent problems,as multiple rounds of funding dilute the founding team’s equity and reduce its ability to control the company.Especially after the IPO,it may also face the threat of hostile takeover by outside capital.In this case,the dual-class share system becomes the best choice for such enterprises.In order to increase the global competitiveness of China’s capital market and meet the needs of the development of The Times,HKEx revised the Listing Rules in 2018,breaking the principle of "one share,one vote" and allowing dual-class share system enterprises to be listed in Hong Kong.After the news was released,Xiaomi Group responded quickly and successfully listed on the Hong Kong main board market on July 9,2018.As the first company in China to be listed in Hong Kong with dual-class share system,its system design has become an important reference for other companies who want to be listed in this way in China.Therefore,this paper selects Xiaomi Group as the research object.The analysis of this paper focuses on the motivation,implementation effect and possible risks of adopting dual-class share structure in Xiaomi Company.Through the analysis,it is found that the motivation of adopting dual-class share structure in Xiaomi Group is as follows:Maintaining the stability of the founders’ control rights,ensuring the execution of the company’s long-term development strategy and reducing the possibility of hostile takeover is conducive to improving the efficiency of capital allocation.However,the reason why external investors accept the dual-class share system is mainly that they are optimistic about the development potential of Xiaomi and trust in the ability of the company’s founding team.Effect comes from the double equity institutions listed on financial performance and non-financial performance,and the impact of corporate governance structure is analyzed from the three,find millet group management cost control ability is excellent and efficient utilization of assets,agency cost is low,and the market expands,all divisions are growing at a rapid pace,overall development is good.This study mainly draws the following three conclusions: First,although the dual-class share system has some side effects on the financial performance of Xiaomi Group after its listing,the overall effect is positive;Second,there are still problems in the implementation of the dual-class share system.Third,the implementation of dual-class share system needs further internal and external supervision.The innovation of this paper lies in the study of the dual-class share system of Xiaomi Group,which further enriches the practical research and provides a new control control solution for similar enterprises.It can also provide a reference for other science and innovation enterprises in China that want to be listed in the domestic capital market.