CEO Turnover at Dual-Class Firms

In recent years, tech companies have increasingly adopted dual-class structures that grant founders high-vote stock. Commentators argue that this entrenches founder-CEOs, allowing them to retain power long after the IPO. Applying time-to-event analysis to a sample of U.S. VC-backed IPOs, we find that dual-class CEOs indeed have a longer median post-IPO tenure—5.6 years versus 4.4 years for a matched sample of single-class firms—based on completed and ongoing CEO tenures. The difference, however, is due to a higher rate of M&A sales involving single-class firms. Excluding transaction-related turnover, we find no significant difference in CEO tenure. Moreover, we find that turnover at dual class firms is highly sensitive to performance, exhibiting similar levels of performance-induced turnover as found in existing scholarship on CEO turnover. Most dual-class turnovers occurred well before any sunset clauses were triggered, calling into question the focus on this governance mechanism.