Dual-class share structure and dividend smoothing

Abstract

This paper delves into the implications of the dual-class share structure, an increasingly prevalent ownership model, for dividend smoothing behaviors. Using a large sample of the U.S., our analysis reveals that firms with dual-class share structures exhibit lesser dividend smoothing behaviors compared to their single-class counterparts. The influence of the dual-class share structure on dividend smoothing is more significant among firms characterized by high free cash flows, limited growth prospects, and those in their mature stages. Furthermore, we observe a higher propensity for dividend reductions or omissions in dual-class firms.