When Google announced in April that it would go public this year, some investors’ eyebrows rose over the plan to issue a class of super shares to ensure that the founders keep control. Each of the Class B shares reserved for insiders will carry 10 votes; ordinary Class A shares sold to the public will have one vote. Yet shareholders-rights groups have long complained that dual-share systems violate the key one-share, one-vote principle. Do these arrangements really undermine the interests of people who own ordinary single-vote shares, or do they help stabilize companies by insulating against takeover attempts and other disruptions? Do ordinary shareholders benefit when a company’s executives, directors and founders own large blocks of shares? A paper co-authored by Wharton finance professor Andrew Metrick offers some insights.
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