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Are Dual-Class Share Structures Bad for Investors?

Some of the most-popular US technology stocks have dual-class share structures, which give founders disproportionate control. How should investors weigh up the pros and cons?

David Brenchley 24 April, 2019 | 1:35PM

Apple campus, Silicon Valley, tech stocks, dual-class share structures, corporate governance, ESG, Lyft IPO, Uber, Pinterest, Facebook, Google, Berkshire Hathaway

One of the fundamental pillars of investing into listed companies is the one-share, one-vote principle that helps minority investors hold company executives to account. However, over the past few decades, this key tenet of the public market has come under pressure.

Since the mid-1980s, we’ve seen a rising trend for companies coming to market with dual-class share structures, which give founders and executives disproportionate control over voting rights. In the past four years, that trend has been accelerating even faster, driven by large Silicon Valley-based tech firms.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Allianz Technology Trust Ord2,330.17 GBP0.87
Alphabet Inc A1,469.93 USD0.00
Alphabet Inc Class C1,464.70 USD0.00
Baillie Gifford American B Acc1,434.42 GBP1.73
Berkshire Hathaway Inc A267,551.00 USD0.00
Berkshire Hathaway Inc B178.83 USD0.00
Facebook Inc A233.42 USD0.00
Janus Henderson Global Technology I Acc2,988.25 GBP0.92
JPMorgan Chase & Co92.66 USD0.00
Lyft Inc Class A31.82 USD0.00
Pinterest Inc24.11 USD0.00
Scottish Mortgage Ord872.70 GBP2.91
Snap Inc Class A23.22 USD0.00

About Author

David Brenchley

David Brenchley  is a Reporter for Morningstar.co.uk

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