Includes bibliographical references. Offprint: Alabama law review. Volume 75, number 1 (2023)
Summary:
Dual-class stock creates a two-tiered ownership structure that allows new investors to buy a piece of a fast-growing company, with just one catch: thy become second-class shareholders who have little or no voting power in the corporation. A rich literature debates whether this arrangement, which cements founder control, is truly optimal for investors. This Article is the first to identify an entirely different type of problem: the structure's social costs. This Article makes three contributions. First, it adds an essential yet missing dimension to the understanding of dual-class stock. the structure's social costs (or negative externalities). Second, it connects the concept of social cost to two developments this century that have supercharged corporate influence on American Ilfe: the rise of dual-class technology companies like Google and Facebook and the widened scope of corporate constitutional rights under U.S. Supreme Court caselaw. The interaction of these changes gives two men (at Google) or even just one (at Facebook) a constitutional beachhead from which thy can deploy vast corporate resources for personal as well as business ends. The Article then develops a poli playbook that is responsive to these problems yet grounded in a fair assessment of the structure's benefits. These solutions can inform approaches to other externalities of the corporation as well. These contributions are both theoretical and practical in nature. They aim to curb the social costs of dual-class stock (and, optimistically, to nurture its social benefits) while preserving its private appeal to founders and investors.
OCLC:
(OCoLC)1431193564
Locations:
OVUX522 -- University of Iowa Libraries (Iowa City)
This resource is supported by the Institute of Museum and Library Services under the provisions of the Library Services and Technology Act as administered by State Library of Iowa.