Dual-class ownership, borrowing costs, and the life cycle effect
We examine the borrowing costs of dual-class firms from a life-cycle perspective. Using a sample of U.S. listed firms, we find that dual-class firms face significantly higher loan spreads than single-class firms only during the growth stage, with no meaningful differences in the introduction or maturity stages. This result is robust to a range of tests addressing self-selection, simultaneity, and omitted variable concerns. We interpret this pattern through the hold-up theory of relationship lending: bank-dependent dual-class firms exhibit a hump-shaped borrowing cost profile over the life cycle, with spreads peaking in the growth stage when banks exploit informational advantages. Our findings indicate that the cost of dual-class ownership is inherently dynamic and operates through debt financing channels.
Authors
- Min‐Teh Yu (ORCID: https://orcid.org/0000-0003-4686-1327)
- Yang Zhao
- Xiaodan Li
Institutions
- Nankai University (CN)
- National Tsing Hua University (TW)
- Nanjing University of Science and Technology (CN)
- National Chengchi University (TW)
Publication Details
- Journal
- Review of Quantitative Finance and Accounting
- Published
- 2026-06-26
- DOI
- https://doi.org/10.1007/s11156-026-01538-1
- Primary Topic
- Experimental Behavioral Economics Studies
- Type
- article
- Field-Weighted Citation Impact
- 0.00
Funders
- National Science and Technology Council
- National Natural Science Foundation of China
- National Science and Technology Council