The Research On The Motivation And Financial Performance Of Implementing Dual-class Share Structure In Xiaomi

With the rapid development of China’s economy,the whole society has ushered in the wave of mass entrepreneurship,and innovative enterprises with strong strength have emerged continuously.Emerging enterprises need a large amount of capital support to develop stably,and listing financing has undoubtedly become the key choice for such enterprises to develop continuously.However,in the process of financing,with the influx of capital from all sides,the original shareholder shareholding ratio and ownership structure of the company will change accordingly,which will lead to the ownership of the company’s control rights.The emergence of dual-class ownership structure ensures the founder team’s control over the growing enterprise while realizing financing,thus promoting the stable development of the enterprise.After JD and Alibaba,which adopted the dual-class share structure,chose to go public in the US due to the limitations of the domestic equity system,the Hong Kong Stock Exchange officially issued the revised Listing Rules in April 2018,allowing enterprises with a dual-class share structure to be listed on the main board.On July 9 of the same year,Xiaomi Corporation became the first company to list in Hong Kong with a dual-class structure.Based on this,this article selects Xiaomi Corporation,which implements dual-share listing,as the case study object.On the basis of combing the existing literature and theories,firstly,it analyzes the financing process and listing process of Xiaomi Corporation.Secondly,from the internal and external perspectives,the motivation of choosing dual share structure is discussed.Then,based on DuPont analysis,the capital use efficiency of Xiaomi after listing is studied.Financial ratio analysis is used to analyze Xiaomi’s solvency,profitability,operating capacity and development capacity after listing.Meanwhile,EVA value and Tobin Q value are combined to analyze Xiaomi’s operating level and market value performance.Finally,conclusions are drawn based on the analysis results and relevant suggestions are proposed.Through analysis and research,this article finds that dual-class share structure can ensure the founder to hold the "steering power".meet the heterogeneous needs of shareholders and promote the long-term development of the company.Meanwhile,the fierce competition in the external market and the domestic market accepts the dual-class share system also promote Xiaomi to implement dual-class share structure.In terms of financial performance,Xiaomi’s solvency,profitability,operation and development capabilities have been improved after its listing,and EVA value has grown steadily.Tobin Q value has been greater than 1 in recent years.On the whole,Xiaomi’s financial performance after listing with dual-class share structure is good,and its corporate value keeps improving.Finally,based on the analysis,this article puts forward five suggestions to improve the dual-class shareholding structure:limit the proportion of super voting rights,improve the decision-making ability of the founding team,guarantee the rights and interests of minority shareholders,set up a reasonable exit mechanism,and improve the regulatory system for dual-class share structures.It is hoped to provide some reference for Chinese enterprises to adopt dual share listing.