[pseudolus]

The verdict on dual class shares is not as unfavourable as is frequently made out in the press as attested to by a recent study in the Harvard Law School Forum on Corporate Governance and Financial Regulation:

"The limited empirical evidence on the technology and emerging growth companies that are the target of these regulations is insufficient to support the adoption of new regulations, as the evidence that is available indicates that the most recent group of dual-class companies may have performed as well, if not better, than those with a single class of stock". [0].

[0] https://corpgov.law.harvard.edu/2018/04/15/are-dual-class-co...

[ericd]

Frankly, as a long term buy and hold investor, I actually prefer to invest in companies where the founders are solidly in control, assuming I believe in their abilities. It seems like it should free them from some of the pressure to optimize for the short term at the expense of long term success.

[dingaling]

But if they aren't predicting profits any time soon you won't be getting dividends. And you'll only have weak voting rights with which to nudge corporate strategy.

So, why invest at all?

[ericd]

Why do people pay so much for Berkshire Hathaway shares, despite their declared intention not to pay dividends?

I trust that they still want to increase their enterprise value.

[somebodythere]

Because you expect the share price to grow to reflect the increased likelihood of being paid dividends in the future.

[lotsofpulp]

Expected present value of future dividends of alternative entity expected to pay dividends and capital gains from said entity is less than expected future value of capital gains from a company that isn’t paying dividends, all adjusted for certain level of perceived risk of course.

[est31]

Even as a minority shareholder you can sue a company if it acts in bad faith in a way that is bad for the shareholders.

[notyourday]

Like Snapchat.

[ericd]

Well, the other criteria is that they have to actually be good businesses. I think it's a good thing for Google, maybe not so much for Snapchat.

[notyourday]

If I recall correctly, Google was profitable when it went public.

[ericd]

Yeah, but I don't think that was short term thinking. They didn't have to mess up their long term prospects to do pull that off.

[notyourday]

I believe that's the difference - Google demonstrated that the founders had a clue by running a profitable business. Snapchat did not.

[walshemj]

Well the Daily Mail got kicked out of the index in London a while for having a dual class structure.

[notyourday]

Well, we will see if the population is smart enough not to buy into it post snapchat.