The effect of Dual Share Structure on firm performance for publicly traded companies in the United States

This paper examines the effect of a company having a dual share structure (DSS) on the firm performance. This research uses a sample consisting of U.S. publicly traded companies to test the effect of dual shares on ROA, the natural logarithm of Tobin’s Q and labour productivity. A dataset with 79,367 firm years from 1998 till 2017 is established; within this dataset a matched sample is created with 13,580 matched dual share and single share company years. This study finds a causal negative relationship between dual shares and firm performance. Other findings include that the benefits of dual share companies erode over time, suggesting that the maturity of a company has a negative effect on the firm performance of a dual share company. Furthermore, increasing executive compensation and extra members on the board of directors in interaction with dual shares have a negative impact on a firms’ Tobin’s Q. The results described in this thesis are found using both Propensity Score Matching and multivariate OLS regressions analyses with interaction terms. This study contributes to the contradicting corporate governance literature that extensively examined the impact of dual shares on firm performance.