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DCSS give owners of certain share classes superior voting rights which, in turn, gives them voting control over a company that is disproportionate to their equity shareholding.  

A single class of common stock with equal voting rights provides voting mechanisms that to ensure the board of directors remain accountable to the majority of the shareholders. This accountability is vital to ensuring that the board – and by extension the management of the company – remains aligned with the interests of the shareholders.

Boards cannot carry out their fundamental oversight purpose if capital structures are designed specifically to render founders, their favoured board members, and their favoured managers, unaccountable to the holders of a majority of outstanding shares.

Dual-class share structures (DCSS) give owners of certain share classes superior voting rights which, in turn, gives them voting control over a company that is disproportionate to their equity shareholding.  

A single class of common stock with equal voting rights provides voting mechanisms that to ensure the board of directors remain accountable to the majority of the shareholders. This accountability is vital to ensuring that the board – and by extension the management of the company – remains aligned with the interests of the shareholders.

Boards cannot carry out their fundamental oversight purpose if capital structures are designed specifically to render founders, their favoured board members, and their favoured managers, unaccountable to the holders of a majority of outstanding shares.

Our most striking finding from existing research is that any potential financial advantages of DCSS for companies (if they exist) tend to recede quite rapidly over a short period of time – although the timeframe over which these financial advantages erode differs between authors who have written on this topic. Notable publications also suggest that firm value is adversely impacted by a misalignment between voting rights and equity stakes. There are also studies and reports that make the case for the outperformance of companies with DCSS, and there are others that are inconclusive.

Our most striking finding from existing research is that any potential financial advantages of dual-class share structures (DCSS) for companies (if they exist) tend to recede quite rapidly over a short period of time – although the timeframe over which these financial advantages erode differs between authors who have written on this topic.

Notable publications also suggest that firm value is adversely impacted by a misalignment between voting rights and equity stakes. There are also studies and reports that make the case for the outperformance of companies with DCSS, and there are others that are inconclusive.

Many long-term investors are strongly opposed to DCSS, and strongly support the principle of 'one share, one vote'. There’s also evidence that concerns about DCSS influence the investment decisions made by institutional investors. There is there is also an emerging tension between the views being expressed by these long-term investors and the growth in the number of companies with, or thinking about, DCSS.

“CalSTRS supports the one share, one vote principle. CalSTRS does not support voting structures in which voting rights are not aligned with economic interests… Companies with existing unequal voting structures should disclose and implement processes to move to a one share, one vote structure.”

(California State Teachers’ Retirement System (CalSTRS))

Many long-term investors are strongly opposed to dual-class share structures (DCSS), and support the principle of 'one share, one vote'. There is also evidence that concerns about DCSS influence the investment decisions made by institutional investors. There's also an emerging tension between the views being expressed by these long-term investors and the growth in the number of companies with, or thinking about, DCSS.

The weakening of shareholders’ voting rights could be accompanied by the deterioration of other important management accountability mechanisms such as those which facilitate effective investor stewardship. This is not just a company-specific issue but one that might affect the dynamics and functioning of investment markets as a whole.  

The term stewardship encompasses a multitude of activities. Investors can exercise their stewardship obligations by engaging with issuers, voting at shareholder meetings, and filing or co-filing shareholder resolutions or proposals. Stewardship creates value for investors by improving the governance of investee companies, strengthening companies’ accountability to their investors, and by encouraging better long-term performance and risk management.

Through examples we’ve seen how the weakening of shareholder rights can go hand in hand with the deterioration of other important management accountability mechanisms.  


The weakening of shareholders’ voting rights could be accompanied by the deterioration of other important management accountability mechanisms such as those which facilitate effective investor stewardship. This is not just a company-specific issue but one that might affect the dynamics and functioning of investment markets as a whole.  

The term stewardship encompasses a multitude of activities. Investors can exercise their stewardship obligations by engaging with issuers, voting at shareholder meetings, and filing or co-filing shareholder resolutions or proposals. Stewardship creates value for investors by improving the governance of investee companies, strengthening companies’ accountability to their investors, and by encouraging better long-term performance and risk management.

Through examples we’ve seen how the weakening of shareholder rights can go hand in hand with the deterioration of other important management accountability mechanisms.