ADVANTAGES OF TRACKING STOCK :

A key advantage of tracking stock is that it offers divisional managers a degree of decision-making authority that
might otherwise be unattainable, given top management’s reluctance to dilute its control over the division’s
assets. The practical effect should be to enhance job satisfaction for divisional managers, thus reducing retention
risk and also increasing the company’s responsiveness to changing market conditions. Also, investors have
more direct access to the specific businesses of the parent, which can be highly useful in the case of a diversified
company. Another possible reason for the growing popularity of trackers is that trackers allow mainstream
companies to exploit the dual stock market pricing between conventional and high-tech or Internet businesses.
By creating tracked business units, conventional businesses too can benefit from the pricing frenzy.