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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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Allianz Technology Trust Ord2,500.00 GBX-2.72
Alphabet Inc A1,616.11 USD3.80
Alphabet Inc Class C1,621.01 USD3.43
Berkshire Hathaway Inc Class A302,500.01 USD-0.17
Berkshire Hathaway Inc Class B201.90 USD0.19
Facebook Inc A263.11 USD-6.31
JPMorgan Chase & Co98.04 USD0.90
Lyft Inc Class A22.83 USD-0.44
Pinterest Inc58.95 USD-5.70
Scottish Mortgage Ord994.50 GBX-2.02
Snap Inc Class A39.39 USD-6.70

About Author

David Brenchley

David Brenchley  is a Reporter for Morningstar.co.uk

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