Document Type
Article
Publication Date
10-2025
ISSN
0360-795X
Publisher
University of Iowa, College of Law
Language
en-US
Abstract
The rise of dual-class stock structures in corporate governance has sparked intense academic, legal, and regulatory debate. In his recent contribution, Dual-Class Contracting, Professor Tallarita persuasively challenges some contemporary interpretations of contractarian theories by showing that dual-class structures do not reflect bespoke bargaining or firm-specific negotiation, but rather result from lawyer-driven standardization, social norms, and path dependency.
Drawing on Tallarita’s empirical findings, we argue that the reality of dual-class structures extends beyond governance formality. Specifically, we contend that investor behavior is driven not by structural governance ideals, but by corporate performance and mission alignment. Companies increasingly design governance structures based on what is most likely to drive performance, not on academic theories or even the views of proxy advisory firms.
Engaging directly with Tallarita’s accurate analysis, we move the debate one step forward by emphasizing that any account of dual-class structures must be grounded in empirical realities: the persistence of dual-class structures reflects not a market failure, but a rational understanding by market participants—including founders, investors, bankers, and others—that greater value has been and can be created through a variety of governance structures that allow companies to focus on mission and long-term value in addition to short-term performance.
Recommended Citation
David J. Berger & Pierluigi Matera,
Performance Leads Governance: A Comment on Professor Tallarita’s Dual-Class Analysis
,
49
The Journal of Corporation Law Digital
101
(2025).
Available at:
https://scholarship.law.bu.edu/faculty_scholarship/4128
