Analysis On The Motivation And Effect Of Dual Share Structure In UCloud

At present,the economic structure of our country is still in a period of adjustment,with the rise of emerging industries,the success or failure of more and more innovative science and technology enterprises begin to rely on the founder’s ability and sufficient capital.However,with the continuous injection of foreign capital,the control of founding shareholders under the traditional shares and rights will inevitably be eroded,and the core position is under constant threat.In April 2018,HKEX allowed technology enterprises with dual-class share structure to go public in Hong Kong,which officially created the first dualclass share system in China,and brought good news to solve the problem of difficult protection of founding shareholders’ control rights.Although the system may still bring some non-negligible risks to the company,such as agency problems,supervision efficiency problems and management defense problems,it cannot be denied that the existence of dualclass share structure does play its institutional advantages in corporate governance,performance,innovation and other aspects,especially for some high-tech industries with relatively strict capital constraints.Therefore,this paper focuses on the four aspects of corporate governance,financial performance,market performance and innovation development,and chooses UCloud Technology Co.,LTD.(hereinafter referred to as "Youkede"),the "first crab" company in China’s A-share market,as the research object to explore the motivation,process and implementation effect of its dual-class shares.On the basis of theories related to dual-class share structure,this paper sorts out the basic situation and business model of UCloud,analyzes its overseas and domestic financing process and equity changes,and obtains the motivation for its implementation of dual-class share structure.It includes the needs of itself as a platform enterprise,the realization of the long-term vision of the company,the maintenance of the stability of the founder’s control,the resistance to hostile takeover and the satisfaction of the heterogeneous needs of shareholders.In the analysis of the implementation effect,this paper first studies the impact of dual-class share structure on the level of corporate governance,focusing on the analysis of the changes of shareholders,the board of directors and the management after the implementation of the structure,so as to provide the institutional basis for the subsequent effect analysis.Then,from the four aspects of solvency,operation,profitability and development ability,the overall financial performance of UCloud is analyzed,combined with the long-term and short-term performance of the company’s value in the market,to better explore whether the dual-class share structure promotes the development of the company.Finally,this paper analyzes the effects of corporate innovation investment and output to find out whether dual-class ownership structure can promote the growth of innovation effect of scientific and technological innovation enterprises,which is also the innovation of this paper.It is found that the implementation of dual-class share structure has both positive and negative effects.In terms of corporate governance,UCloud can consolidate the controlling position of the founder team,ensure the effectiveness of corporate governance,and improve the efficiency of corporate governance.Moreover,compared with the history,its management expense rate is constantly declining.In terms of corporate performance,the debt paying ability has been improved to a certain extent after listing,and the operating capacity has been relatively stable,but the performance of growth ability and profitability is not satisfactory,which needs to be improved.However,this is closely related to the lowprice market expansion strategy of the company.Under the dual-class share structure,founders often achieve long-term development at the expense of short-term interests.In terms of market value,it can indeed attract a large number of investors in the short term,but in the long term,the company’s market performance is not ideal,has broken the issue price.The comparison of innovation level shows that UCloud continues to increase innovation investment and can convert input into output,and the dual-class share structure can greatly promote the company’s innovation.Dual-class share structure can greatly promote the innovation of the company.Finally,after summarizing the whole content of this paper,it is found that the implementation of dual-class share structure has a positive impact on scientific and technological innovative enterprises,showing great advantages in many aspects of corporate governance.However,the implementation of this structure also brings certain risks to the company,which need to be avoided by measures.Therefore,this article summarizes the positive and negative impacts obtained in the process of implementing the dual-class share structure,gives relevant suggestions on its existing problems,and finally puts forward enlightenment for other companies considering implementing dual-class share structure.