SINGAPORE (Dec 17): It irks investors in the US, and now it is irking them in Europe too. The US stock market’s permissive attitude to IPOs that give founders super-voting rights is the subject of an international campaign. Rightly so. The US new-issues market is the de facto standard setter for the rest of the world. Undemocratic voting structures are an unwelcome export.
The “one-share, one-vote” principle is fair and gives outsiders some sway to hold management to account. True, Google parent Alphabet’s stock price has thrived with dual-class shares giving its founders control. But it is the exception.
Shares in Snap, Altice USA and Blue Apron Holdings have performed terribly since going public in 2017. The controversies swirling around Facebook raise questions about whether founder, CEO and chairman Mark Zuckerberg’s dominant position still benefits the company.