The Life-Cycle of Dual Class Firm Valuation

The Life-Cycle of Dual Class Firm Valuation

Martijn Cremers, Beni Lauterbach, Anete Pajuste

Series number :

Serial Number: 

Date posted :

May 02 2018

Last revised :

October 21 2020
SSRN Share


  • Dual Class Shares • 
  • life cycle • 
  • anti-takeover defenses • 
  • Unifications • 
  • sunset provisions

We examine U.S. dual and single class firms in 1980-2019 and document their valuation differences over their corporate life cycle. At the IPO, dual class firms have higher mean valuations than single-class firms, and there is some evidence that this premium may emanate from dual class firm founders’ unique vision and leadership skills.

As firms age, the valuation premium of dual class firms tends to dissipate, possibly because dual class agency problems increase due to a gradual widening of the wedge (difference between insider voting and cash flow rights) in the post-IPO years.