The power of control: the acquisition decisions of newly public dual-class firms

被引：10
作者：
Adhikari H.P. [1 ]
Nguyen T.T. [2 ]
Sutton N.K. [3 ]
机构：
[1] Department of Economics, Finance and Information Systems, College of Business, Embry-Riddle Aeronautical University, Daytona Beach, 32114, FL
[2] Department of Business and Economics, Limestone College, Gaffney, 29340, SC
[3] Department of Finance, College of Business, University of South Florida, Tampa, 33620, FL
来源：
Review of Quantitative Finance and Accounting | 2018年 / 51卷 / 1期
关键词：
Dual-class; Innovation; Mergers and acquisitions; Shareholder rights; Single-class;
D O I：
10.1007/s11156-017-0665-6
中图分类号：
学科分类号：
摘要：
Many private firms that go public opt for a dual-class share structure which gives insiders stronger voting power, at the expense of shareholder democracy. We examine how the dual-class structure influences the merger decisions of newly public firms, which have a notable appetite for acquisitions. Specifically, we compare acquisition activity, method of payment choice, and the long-run value implications of acquisitions by newly public single-class and dual-class US companies. Our results show that dual-class IPO firms make relatively more acquisitions in innovative industries and are less likely to pay with stock as compared to single-class IPO firms. The reluctance of dual-class firms to pay with stock is positively related to the wedge between the insiders’ voting rights and cash-flow rights. We also find that newly-public dual-class acquirers perform better in the long-run than newly-public single-class acquirers, mainly due to dual-class acquisitions in innovative industries. Our multivariate analysis shows that these findings hold after controlling for relevant risk factors associated with industry, deal, and firm specific characteristics. These results suggest that the dual class structure may enable newly-public firms to make better M&A decisions after going public. © 2017, Springer Science+Business Media, LLC.
引用
收藏
页码：113 / 138
页数：25
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