Why companies aren’t democracies, and why that’s okay

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Dual-class voting shares provide one class typically 10 to 20 more votes a share than another, which allows some minority shareholders to dominate a company

Behind every ridiculous business story, there are often dual-class voting shares, which provide one class typically 10 to 20 more votes a share than another.

If you look past the anecdotes , the evidence about dual-class shares is quite surprising. Empirical studies reveal dual-class share structures are associated with better corporate performance than single-class share structures. In this respect, super voting shares are like almost every other governance practice advocated by the governance industry: none of them are supported by the empirical evidence.

Concerning the most critical issue of long-term economic performance, corporate law and governance professor Bobby Reddy of the University of Cambridge summarizes this

 

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