The rise of dual-class stock IPOs

Dhruv Aggarwal, Ofer Eldar*, Yael V. Hochberg, Lubomir P. Litov

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

15 Scopus citations


We create a novel dataset to examine the recent rise in dual-class IPOs. We document that dual-class firms have different types of controlling shareholders and wedges between voting and economic rights, and that the increasing popularity of dual-class structures is driven by founder-controlled firms. We find that founders’ wedge is greater when founders have stronger bargaining power. The increase in founder control over time is due to greater availability of private capital and technological shocks that reduced firms’ needs for external financing. Stronger bargaining power is also associated with a lower likelihood of sunset provisions that terminate dual-class structures.

Original languageEnglish (US)
Pages (from-to)122-153
Number of pages32
JournalJournal of Financial Economics
Issue number1
StatePublished - Apr 2022


  • Corporate governance
  • Dual-class
  • Entrepreneurship
  • Initial public offerings (IPOs)
  • Private firms
  • Venture capital

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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