Dual‐class shares and capital allocation decisions: Evidence from share repurchases and M&A activities

Abstract

This study examines whether dual‐class governance affects how investors and firms respond to major capital allocation decisions. Using U.S.‐listed firms from 2014 to 2025, we analyze share repurchases and M&A transactions in which dual‐class firms act as acquirers or targets. We assess announcement‐period abnormal returns, long‐horizon stock performance, and post‐event operating performance relative to matched single‐class firms. The results show a favorable market response to repurchase announcements by dual‐class firms, while acquisition‐related outcomes are more neutral. Dual‐class acquirers do not exhibit systematic performance differences, and dual‐class targets show lower announcement gains only in univariate comparisons. Across longer horizons and accounting outcomes, we find no evidence of persistent disadvantages associated with dual‐class status. Overall, the findings indicate that unequal voting rights do not imply a uniform performance discount; their relevance depends on the type of capital allocation decision.