The Quality of Information Provided by Dual-Class Firms

When Google went public with a dual-class capital structure in which shares owned by the founders confer greater voting rights than shares issued to public investors, its cofounders, Larry Page and Sergey Brin, promised to provide investors with high-quality information about the company. Using the words of Warren Buffett, the chairman and CEO of Berkshire Hathaway, another dual-class firm, they promised shareholders, “We won’t ‘smooth’ quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you.” Page, Brin, and Buffett definitely understood the importance of quality information to their investors, especially in dual-class structures. But do dual-class companies really provide investors with credible financial information? Contrary to the assumption of agency theory that dual-class firms are less transparent, we find empirically that these companies do provide credible information to their investors. Our results suggest that the quality of financial reports, as measured by their ability to predict change in future earnings, is higher for dual-class companies than for their single-class counterparts. These findings may be explained by the unique relations created in dual-class firms in which the founders provide investors with higher-quality information in exchange for superior voting rights. The article contributes to the heated debate about the transparency of dual-class companies by providing policy makers with important insights on the quality of information provided by these companies. Our findings suggest that there is no need for stricter regulation with regard to disclosure of financial information by dual-class firms.     

Intergroup Biases as a Function of Reflected Status Appraisals and Support for Legitimizing Ideologies: Evidence from the USA and Israel

Theory and research suggest that members of high-status groups feel more positively about their own group than members of low-status groups feel about their group. The studies presented here test two hypotheses derived from this general idea (1) that members of high-status groups will show greater bias in favor of the in-group when they believe that others perceive the status difference between their group and relevant low-status groups to be larger; and (2) that this relationship will be stronger when high-status group members also endorse ideologies legitimizing their privileged status. However, because low group status may have self-protective properties, it was hypothesized that imputed status differences would not relate to out-group bias among low-status group members, regardless of ideology endorsement. Two studies—using samples from the United States and Israel, respectively—provided clear support for these hypotheses. Implications for the study of both intergroup biases and legitimizing ideologies are discussed.     

Too soon to panic

Health Care: The small-business lobby says Clinton's mandatory plan will kill off jobs. But Mom and Pop may end up breathing easier.     

The agrarian question and class contradictions in South Africa: Some theoretical considerations

The article first considers two dominant approaches to black rural social formations in South Africa, those of neo‐classical populism and radical political economy, examining their ideology and politics as well as their theoretical inadequacies. The major part of the article then provides a general interpretation of the theory and politics of the agrarian question in Marxism, which has strategic implications for the current phase of national democratic struggle in South Africa, as for democratic and socialist struggles elsewhere. This discussion concentrates on issues concerning the land question, the agriculture/industry contradiction and the worker‐peasant alliance, petty commodity production and class differentiation vs. a homogenised rural mass ('the people'), and the centrality of the agrarian question to national democratic struggles and those for socialist transformation.     

Selected Federal Research Grants for the Fiscal Year 1987

Selected Federal Research Grants for the Fiscal Year 1987