The Problem With Dominant Mark Zuckerberg Types
The U.S. stock market is too permissive about giving company founders super-voting rights in IPOs. Academic evidence shows that it’s often a liability.
“One share, one vote” needs to be the bedrock of corporate governance around the world, and America must take the lead.
Photographer: Drew Angerer/Getty ImagesIt irks investors in America, and now it’s irking them in Europe too. The U.S. stock market’s permissive attitude to initial public offerings that give founders super-voting rights is the subject of an international campaign. Rightly so. The U.S. 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 Inc.’s stock price has thrived with dual-class shares giving its founders control. But it’s the exception.