Dual Class Structure and Securities Class Actions

• Main Authors: Wei-Chin Wen, 溫偉芩
• Other Authors: 許文馨
• Format: Others
• Language: en_US
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/ekukb4

碩士 === 國立臺灣大學 === 會計學研究所 === 105 === Most prior studies focus on the impact of dual class structure on corporate governance, this study examines whether firms with dual-class structure are more likely to engage in securities class actions (SCAs). Dual-class structure often resulted in a significant separation between controlling shareholders’ voting rights and cash flow rights. This divergence aggravates agency conflicts and dual class firms thus tend to extract private benefit at the expense of non-controlling shareholders. To conceal the extraction, dual class firms may take actions to avoid monitoring of outside shareholders. Outside shareholders may need to resort to SCAs as an ex post governance mechanism. Motivated by prior literature, this study hypothesizes the relation between dual class and SCAs is positive. My empirical results show that firms with dual class structure are more likely to involve in SCAs, and the likelihood of litigation occurrence increases as the gap of the rights separation widens.