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Epilogue

from Part III - Formulating a Policy on Dual-Class Stock

Published online by Cambridge University Press:  29 October 2021

Bobby V. Reddy
Affiliation:
University of Cambridge
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Summary

In contrast to the United States and, to a lesser extent, China, the United Kingdom’s listed company tech market is threadbare, notwithstanding the pipeline of growing, successful private companies.As part of a package to support entrepreneurs and innovation, relaxing the premium tier prohibition of dual-class stock could attract flotations on the London Stock Exchange by enabling founders to divest of equity and generate finance for growth while retaining the control essential to them in pursuing their long-term visions.Although regulators, and institutional investors, fear that dual-class stock incentivises public shareholder expropriation by controllers, evidence from other jurisdictions, especially the United States, does not corroborate those fears, and many exchanges, such as Hong Kong, Singapore, Tokyo, Shanghai and India have recently determined that the benefits of dual-class stock outweigh the costs.However, evidence also suggests that existing dual-class firms are excessively discounted by the market, and the United Kingdom could, therefore, accrue a commercial advantage by reducing the cost of capital for dual-class firms through the judicious use of constraints.By tailoring those constraints carefully as proposed in this book, ‘founder without limits’ will not be feared, but will be seen as a critical piece of the jigsaw in boosting the British economy in uncertain times.

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Founders without Limits
Dual-Class Stock and the Premium Tier of the London Stock Exchange
, pp. 417 - 421
Publisher: Cambridge University Press
Print publication year: 2021

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  • Epilogue
  • Bobby V. Reddy, University of Cambridge
  • Book: Founders without Limits
  • Online publication: 29 October 2021
  • Chapter DOI: https://doi.org/10.1017/9781108989893.012
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  • Epilogue
  • Bobby V. Reddy, University of Cambridge
  • Book: Founders without Limits
  • Online publication: 29 October 2021
  • Chapter DOI: https://doi.org/10.1017/9781108989893.012
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Epilogue
  • Bobby V. Reddy, University of Cambridge
  • Book: Founders without Limits
  • Online publication: 29 October 2021
  • Chapter DOI: https://doi.org/10.1017/9781108989893.012
Available formats
×