Question

in what sense might dual share classes be beneficial to society in the long run?

Answer 1

Explaination- Dual Class shares signifies issuing various types of shares in a single firm, this can consist of Class A and Class B these shares can differ based on voting rights and payment of dividend.

When such a situation occurs in the company one class of shares is traded with the general public and another class is for founders or executives of the company who has greater control of voting rights.

Some theories say that dual shares give privilege to the founder to run the company and think longterm, rather than be in the trap of gaining short term profit as short-term investors, however, dual-class has been a controversy as they do not allow general public shareholders a say in taking decisions of the company and thus distributes the risk unequally.

To explain how the dual share classes are beneficial to society in the loan run as the founders have a long term vision of the company by keeping the dual shares while the investors are mostly focused on short term visions.

Due to the long term vision, the company's performance may be benefited as they have faith in the company's long term growth which would indirectly effect the society in the long run.