Skip to main content Accessibility help
×
Hostname: page-component-78c5997874-s2hrs Total loading time: 0 Render date: 2024-11-03T01:57:30.025Z Has data issue: false hasContentIssue false

1 - The Cult of Dual-Class Stock in the Era of Big Tech

from Part I - Putting Dual-Class Stock into Context

Published online by Cambridge University Press:  29 October 2021

Bobby V. Reddy
Affiliation:
University of Cambridge
Get access

Summary

Chapter 1 sets the scene, highlighting the rise of US dual-class stock success stories in recent years, before contrasting it with the rules of the FCA, which prohibit dual-class stock from the London Stock Exchange’s most prestigious listing segment, the premium tier.Regulators fear that dual-class stock incentivises controllers to extract personal benefits to the detriment of shareholder value.However, there has been a significant decline of UK IPOs in recent years, with a severe dearth of large tech company listings, with high-growth companies and unicorns seeking private finance options instead.The United Kingdom is subject to disproportionate levels of takeover activities, and thriving British businesses are regularly being purchased by foreign acquirors.Dual-class stock could, though, encourage and promote the listing of high-growth companies, enabling founders to divest of equity and generate further equity finance for growth, while insulating the management team, and its pursuit of the founder’s long-term, idiosyncratic vision, from removal by public shareholders and takeovers if short-term profits are low.Although the standard tier listing of The Hut Group was a success, it entailed certain compromises which emphasise the importance of the premium tier, and dual-class stock could be the shot-in-the-arm to resuscitate what has become a moribund IPO market.

Type
Chapter
Information
Founders without Limits
Dual-Class Stock and the Premium Tier of the London Stock Exchange
, pp. 15 - 69
Publisher: Cambridge University Press
Print publication year: 2021

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×