Dissertation
Essays on Dual-Class Structure and Corporate Governance: Exploring the Impact on Firm Performance, Innovation, and Compensation
Washington State University
Doctor of Philosophy (PhD), Washington State University
05/2024
DOI:
https://doi.org/10.7273/000006524
Abstract
For the first chapter of this dissertation, I explore the impact of dual-class structure IPOs on firm performance and innovation in technology firms. We investigate board-related attributes' influence on firm value and innovation in such IPOs. A comprehensive analysis of technology firms' IPOs from 1994 to 2020 reveals that dual-class structure tech firms outperform their counterparts in two-year stock returns and firm value. These firms also exhibit greater investment in innovation and more patents granted. Dual-class technology firms typically feature smaller board sizes and fewer non-executive directors. Improved board independence positively affects firm value, while larger board sizes enhance patent quality, but increased board independence has adverse effects.
In the second chapter, I investigate the nexus between dual-class structure and executive compensation, considering the role of agency problems and the moderating influence of executive ownership, voting power, and board characteristics post-Dodd-Frank Act. Utilizing data from the Execucomp dataset spanning 2011 to 2022, encompassing 2,519 firms, including 174 with dual-class structures, empirical analysis reveals a statistically significant negative association between dual-class structure and equity-based compensation, consistent with CEO control and turnover hypotheses. Despite mixed moderation effects, the overall impact of dual-class structure on executive compensation remains adverse, challenging prevailing agency problem assumptions. Furthermore, the study underscores a negative association between CEO-chair duality and executive compensation in dual-class firms, indicating minimal agency conflict. These findings address a significant research gap, offering insights into corporate governance dynamics, suggesting that agency issues may not significantly influence executive compensation within dual-class firms, instead potentially providing greater position security.
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Details
- Title
- Essays on Dual-Class Structure and Corporate Governance
- Creators
- Hui-Heng Cheng
- Contributors
- George J Jiang (Chair)Michael J McNamara (Committee Member)David A Whidbee (Committee Member)
- Awarding Institution
- Washington State University
- Academic Unit
- Carson College of Business
- Theses and Dissertations
- Doctor of Philosophy (PhD), Washington State University
- Publisher
- Washington State University
- Number of pages
- 106
- Identifiers
- 99901121130501842
- Language
- English
- Resource Type
- Dissertation