Tracking stock (TS), also known as target stock (targeted stock) or letter stock (letter stock), is designed by a company to specifically track the operating performance of some specific parts of the company or a specific subsidiary subsidiary. A special kind of stock listed in the public offering.
Originally emerging as an alternative form of avoiding corporate demergers, tracking stocks have become an important innovative financial tool due to some unique and desirable properties, especially as a brand new type of business Equity restructuring tools are favored by many large enterprises.
Tracking stocks is a major innovative financial tool developed by the market. In traditional securities theory, stocks represent the company’s assets, and these assets are indivisible. Stock returns are calculated based on these assets and enjoy the right to final repayment. Common stocks participate in company decision-making based on the principle of “one share, one vote”. manage. Tracking stocks breaks through these conventions, breaks the indivisibility of stock assets under the traditional securities theory, and incorporates the idea of ​​separating asset ownership and income rights, so that the stock income rights are linked to the operating performance of the parent company’s business branch entities; at the same time, it also breaks through The “one share, one vote” type of corporate decision-making participation rights. Tracking stocks may not have decision participation rights, or may have decision participation rights that vary dynamically in size.