A Research on The Economic Consequences of The Implementation of Dual-Class Share (DCS) Structure: A Case Study Based on Kuaishou Technology
DOI:
https://doi.org/10.54097/79pajj92Keywords:
Dual-Class Share; Initial Public Offering; Kuaishou Technology.Abstract
Following the abolition of the dual-class share structure in 1989, the Hong Kong Exchanges and Clearing Limited re-launched the "Weighted Voting Right" mechanism. In February 2021, Kuaishou Technology listed in Hong Kong with a dual-class share structure, which has been regarded as the initial public offering of “the first stock of short video” drew the attention of many investors. Particularly, numerous international scholars have examined the performance of the dual-class share structure. This paper examines the economic consequences of the three dimensions based on the IPO of Kuaishou Technology. Taken together, by adopting a dual-class share structure, managers are more likely to face lower unsystematic risk and firms are less likely to face acquisition risks, as well as higher innovation performance and thus greater growth potential with a particular emphasis on operation capacity and profitability, even if the performance is not obvious in the short term. The contribution of this paper is to provide practical experiences for other Internet companies with the aim of promoting dual-class share structure and corporate sustainability.
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