Purpose The purpose of this paper is to examine what is weighted more by the investors when valuing a dual-class firm’s stock – greater agency costs or better accrual quality of the dual-class firm in contrast to the single-class firm. Design/methodology/approach Using the financial data of...

Why do firms deviate from a one share-one vote regime when going public? We consider three arguments for this choice. Examining data on U.S. IPOs from 1980 through 2008, we do not find that firms that go public with dual class stock so managers have more incentive to invest in hard to monitor...