Impact of Dual-Class Share Structure on Corporate Governance: A Case Study of JD.com, Inc.

With the rapid development of the global economy, companies operating under the one-share-one-vote principle are facing increasingly heightened risks of losing control rights amid equity financing. This conventional corporate governance framework has proven insufficient to meet the needs of all enterprises in Chinas booming equity market, especially fast-expanding internet and e-commerce giants. For such firms, the one-share-one-vote structure may lead to the gradual erosion of the founding teams control over the company after multiple rounds of financing, even to the point of losing strategic decision-making power. TakingJD.com, Inc. as a specific case, this study conducts an in-depth exploration of the determinants behind adopting a dual-class share structure and its subsequent governance implications. The research finds that while the dual-class structure has helpedJD.commeet large-scale financing needs while maintaining the stability of the founders control, it has also triggered issues such as the dilution of minority shareholders voting rights, doubts about the transparency of corporate decision-making, and thus, potential reputational risks. Based on the above findings, this paper puts forward a series of targeted recommendations, such as reducing the gap in voting ratios between different classes of shares, establishing a more robust mechanism for protecting minority shareholders interests, and optimizing corporate decision-making efficiency by introducing independent third-party supervision.