Corporate cash and the Firm's life-cycle: Evidence from dual-class firms

James Juichia Lin, Wei Zhong Shi*, Li Fang Tsai, Min Teh Yu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


This research explores whether a dual-class ownership structure affects a firm's propensity to stockpile cash reserves over the life cycle stages. Using a sample of U.S. dual-class firms, evidence shows that the cash holdings of dual-class firms are significantly lower than that of single-class firms by 2.42%. The dual-class firms that exploit external debt financing deploy more cash for acquisition activities. More importantly, dual-class firms decrease their cash holdings by only 2.8% when growing from young to mature, while single-class firms decrease that by 5.88%. During the mature stage, the dual-class firms experience a larger fall in operating net cash flow, cash acquisition expenditure, and debt financing than do single-class firms. These findings, however, are only significant for firms with high information asymmetry. Our evidence of changes in cash holdings shows that agency costs associated with dual-class ownership increase over the life cycle.

Original languageEnglish
Pages (from-to)27-48
Number of pages22
JournalInternational Review of Economics and Finance
StatePublished - Jul 2022


  • Agency cost
  • Cash holdings
  • Dual-class ownership
  • Life cycle
  • Voting rights


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