Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • March 2010
  • Article
  • Review of Financial Studies

Extreme Governance: An Analysis of Dual-Class Firms in the United States

By: Paul A. Gompers, Joy Ishii and Andrew Metrick
  • Format:Print
ShareBar

Abstract

We construct a comprehensive list of dual-class firms in the United States and use this list to analyze the relationship between insider ownership and firm value. Our data have two useful features. First, since dual-class stock separates cash-flow rights from voting rights, we can separately identify the impact of each. Second, we address endogeneity concerns by using exogenous predictors of dual-class status as instruments. In single-stage regressions, we find strong evidence that firm value is increasing in insiders' cash-flow rights and decreasing in insider voting rights. In instrumental variable regressions, the point estimates are similar but the significance levels are lower.

Keywords

Voting; Cash Flow; Stocks; Rights; Ownership Stake; Value; United States

Citation

Gompers, Paul A., Joy Ishii, and Andrew Metrick. "Extreme Governance: An Analysis of Dual-Class Firms in the United States." Review of Financial Studies 23, no. 3 (March 2010).
  • Find it at Harvard

About The Author

Paul A. Gompers

Finance
→More Publications

More from the Authors

    • July 2022
    • Journal of Financial Intermediation

    Private Equity and COVID-19

    By: Paul A. Gompers, Steven N. Kaplan and Vladimir Mukharlyamov
    • 2022
    • Faculty Research

    Transferable Skills? Founders as Venture Capitalists

    By: Paul A. Gompers and Vladimir Mukharlyamov
    • March 2022
    • Faculty Research

    Pakistan Rising: Bazaar's Growth Story (B)

    By: Paul A. Gompers and Gamze Yucaoglu
More from the Authors
  • Private Equity and COVID-19 By: Paul A. Gompers, Steven N. Kaplan and Vladimir Mukharlyamov
  • Transferable Skills? Founders as Venture Capitalists By: Paul A. Gompers and Vladimir Mukharlyamov
  • Pakistan Rising: Bazaar's Growth Story (B) By: Paul A. Gompers and Gamze Yucaoglu
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College