Research On Corporate Governance Effect Of Dual-class Share System

In recent years,China’s technology innovative enterprises have developed rapidly.Such companies need a large amount of cash flow in the development process.A two-tier equity structure can prevent companies from being unfairly taken over while receiving equity investment,and can also reduce the tendency of external investors to focus on short-term profits of the company and promote long-term development,so many technology innovation companies have introduced a two-tier equity system in the development process.In order to promote the diversification of China’s capital market and enhance its attractiveness to domestic and foreign companies,the HKEx in 2018 and the STI Board in 2019 began to allow the listing of companies with a two-tier equity structure.The double-tier equity structure abandons the original voting principle and allows similar stocks to differ in voting rights,which can guard the absolute control position of founders,but also brings many impacts on corporate governance.This paper first summarizes and concludes relevant domestic and foreign studies to clarify the concepts related to double-tier shareholding structure and corporate governance;then analyzes the impact mechanism of double-tier shareholding system on corporate governance based on control theory,principal-agent theory,information asymmetry theory,incomplete contract theory,and new institutional economics theory.This paper selects Alibaba and Xiaomi as case studies,introduces the development history and current situation of two companies’ two-tier equity structure,compares and analyzes the impact of two types of two-tier equity system on corporate governance governance structure in terms of equity structure,board governance,equity incentives and stakeholders,compares and analyzes the impact of two types of two-tier equity system on corporate governance performance in terms of financial performance,innovation ability,market size and talent pool and on corporate governance performance,and summarizes the impact of the two types of two-tier equity systems on corporate governance.The conclusions of this paper are as follows: first,the emergence of a two-tier equity system is essentially an induced change,and a two-tier equity system can improve a company’s equity financing capacity on the basis of ensuring the control of the founders,which is conducive to corporate innovation and long-term development;second,a two-tier equity system has both positive and negative effects on corporate governance,which can be suppressed by improving the internal monitoring mechanism and risk disclosure mechanism of the company,and improving the performance of corporate governance by adopting a two-tier equity structure.The negative impact can be suppressed by improving the internal supervision mechanism and risk disclosure mechanism,and improving the corporate governance structure and governance performance of companies with double-tier equity structure.Third,the capital market allows the listing of companies with double-tier equity system,which to a certain extent promotes the further change of the system and is conducive to giving full play to the advantages of the double-tier equity system on the basis of improving the relevant supporting systems.On the basis of the above study,policy recommendations such as strengthening internal regulation,information disclosure and improving supporting systems are proposed.