The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Fri, 17 Jul 2026 11:32:25 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png The Dangers of Dual Share Classes – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 The Dangers of Dual Share Classes https://corpgov.law.harvard.edu/2012/05/21/the-dangers-of-dual-share-classes/?utm_source=rss&utm_medium=rss&utm_campaign=the-dangers-of-dual-share-classes https://corpgov.law.harvard.edu/2012/05/21/the-dangers-of-dual-share-classes/#comments Mon, 21 May 2012 13:58:57 +0000 http://blogs.law.harvard.edu/corpgov/?p=29001?d=20150113142534EST Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday, May 21, 2012
Editor's Note:

The following post comes to us from Kimberly Gladman, Director of Research and Risk Analytics at GovernanceMetrics International, and is based on a GMI Ratings report by Ms. Gladman and Beth M. Young, available here.

Executive Summary

Recent issues related to dual share classes with disparate voting rights have sparked controversy at Google, News Corp, and perhaps most dramatically, radio broadcaster Emmis Communications. These examples demonstrate the dangers to investors that result when voting power does not align with economic interest—a risk indicator GMI Ratings has identified at over 200 publicly traded companies in the Russell 3000.

Dual Share Classes and Governance Risk

Recently, both Google and News Corp have been in the news for issues related to dual share classes with disparate voting rights. Google has announced that as part of a stock split, it will issue a new class of stock that has no voting rights for current shareholders. The plan will further solidify the power of the company’s leadership, which already controls two-thirds of the voting power through special Class B shares. At News Corp, meanwhile, non-US domiciled Class B shareholders have recently seen their voting power reduced as a means of remedying the company’s non-compliance with US regulations on foreign ownership of broadcasters. This step has relatively minor impact on voting at the company, since the Murdoch family already determines the outcome of any matter through its ownership of 40% of the voting stock.

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