Dual Class Recapitalization

Dual Class Recapitalization

The new issue of common stock that a company distributes to current stockholders in exchange for previously-issued common stock. The new common stock usually has fewer voting rights. Dual class recapitalization increases the board of directors' control over the management of the company.
References in periodicals archive ?
Researchers have examined dual class recapitalization individually and less frequently, while the other provisions have received more research attention and typically have been examined in various combinations.
Four studies evaluate the impact of dual class recapitalization on stock prices, and find mixed effects.
These findings are also supported by Akhigbe and Madura (1996) with respect to long-term valuation and by Hanson and Song (1995) in the case of dual class recapitalization provisions adopted in the 1980s.
Targeted Stock differs from a dual class recapitalization, however, because voting rights are not reallocated to concentrate majority ownership among insiders.
These alternatives include equity carve-outs, dual class recapitalizations, and spin-offs.
These alternative methods include equity carve-outs, dual class recapitalizations, and spin-offs.
A sample of 114 firms that announced the adoption of dual equity class voting structures between 1979 and 1987 is used to look for evidence of changes in board of director composition, debt leverage, and dividend policy around the time of a dual class recapitalization.
We seek to determine which, if any, of these alternative monitoring mechanisms are more extensively used after a dual class recapitalization.
In addition to the tests identified above, we also consider the impact of the level of insider ownership before the dual class recapitalization on changes in each of the alternative monitoring mechanisms.
Sisneros, 1992, "Substitute for Voting Rights: Evidence from Dual Class Recapitalizations," Financial Management (Autumn), 35-47.
ONE OF THE MOST important business developments of the past decade has been the proliferation of corporate restructuring that has occurred through a variety of corporate control transactions, including hostile and friendly tender offers, mergers, going private transactions, leveraged recapitalizations, divestitures, and dual class recapitalizations.
The advent of large hostile tender offers in the 1980s has precipitated a variety of corporate restructurings, including many going-private transactions, leveraged recapitalizations, and dual class recapitalizations.