Description:
We document a strong negative impact of dual-class ownership structure on corporate innovation. The potential mechanism driving this result is the managerial consumption of private benefits of control as measured by the voting premium attached to the superior voting shares. We also find that the relation between dual-class ownership and innovation depends on firms’ lifecycle: for younger firms, we find a slightly positive relation, while for older and more mature firms, the relation is strongly negative. Our results suggest that a policy of time-based sunset provision can be beneficial for innovation