Last edited by Kajigul
Saturday, April 25, 2020 | History

2 edition of Why higher takeover premia protect minority shareholders found in the catalog.

Why higher takeover premia protect minority shareholders

Mike Burkart

Why higher takeover premia protect minority shareholders

tender offers when dilution is endogenous

by Mike Burkart

  • 56 Want to read
  • 39 Currently reading

Published by London School of Economics, Centre for Economic Performance in London .
Written in English


Edition Notes

Statementby Mike Burkart, Denis Gromb and Fausto Panunzi.
SeriesEconomic performance discussion paper series / London School of Economics, Centre for Economic Performance -- no.221, Economic performance discussion paper (London School of Economics, Centre for Economic Performance) -- no.221.
ContributionsGromb, Denis., Panunzi, Fausto.
ID Numbers
Open LibraryOL21203360M


Share this book
You might also like
Regulation of oil & gas profits;

Regulation of oil & gas profits;

Federal housing moratorium.

Federal housing moratorium.

Glossary of geographical and topographical terms and of words of frequent occurrence in the composition of such terms and of place-names

Glossary of geographical and topographical terms and of words of frequent occurrence in the composition of such terms and of place-names

Sea grant college program.

Sea grant college program.

Mercenaries in Africa

Mercenaries in Africa

The Central connection

The Central connection

Exile on a peppercorn

Exile on a peppercorn

Dorning in England and America

Dorning in England and America

Truancy and school phobias

Truancy and school phobias

The country house

The country house

Hiss the villain or foiled and counterfoiled

Hiss the villain or foiled and counterfoiled

Training for professional accountants in industry, commerce and public services

Training for professional accountants in industry, commerce and public services

Why higher takeover premia protect minority shareholders by Mike Burkart Download PDF EPUB FB2

A higher bid price induce, however, less extraction of private gains and lower bidders’ profits, thereby preventing some desirable take-overs. Incumbent shareholders take these features into account when designing corporate decision rules.

They trade off higher takeover premia and minority share value against a higher probability of take-over. Posttakeover moral hazard by the acquirer and free‐riding by the target shareholders lead the former to acquire as few sharcs as necessary to gain control.

As moral hazard is most severe under such low ownership concentration, inefficiencies arise in successful takeovers. Moreover, share supply is shown to be upward‐sloping. Rules promoting ownership concentration limit Cited by: Furthermore, higher takeover premia induced by competition translate into higher ownership concen‐tration and are thus beneficial.

Finally, one share‐one vote and simple majority are generally not optimal, and socially optimal rules need not emerge through private contracting. (This abstract was borrowed from another version of. Why Higher Takeover Premia Protect Minority Shareholders. They trade off higher takeover premia and minority share value against a higher probability of take- over.

For instance, if there are only two classes of equity, voting and nonvoting shares, it is shown that the one share-one vote rule need not be optimal. In this sense, high. Burkart, Mike & Gromb, Denis & Panunzi, Fausto, "Why higher takeover premia protect minority shareholders," LSE Research Online Documents on EconomicsLondon School of Economics and Political Science, LSE Library.

Rather than being concerned to protect the company, a minority shareholder in such a position is usually more concerned to protect himself personally from the adverse consequences of being a shareholder in a company with a majority shareholder managing the company in his (the majority shareholder’s) own best interests rather than for the.

One of the features of takeover law is the protection of minority shareholders. This article examines the extent at which the protection of minority shareholders is an objective of EU law, comparing certain provisions in the Takeover Directive with their equivalent in English law.

The arguments advanced in this article are by: 3. Mike Burkart & Denis Gromb & Fausto Panunzi, "Why Higher Takeover Premia Protect Minority Shareholders," Journal of Political Economy, University of Chicago Press, vol. (1), pagesFebruary. Mike Burkart & Denis Gromb & Fausto Panunzi, "Why Higher Takeover Premia Protect Minority Shareholders," Journal of Political Economy, University of Chicago Press, vol.

(1), pages: Mark Broere, Robin Christmann. The World Economic Forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas.

Incorporated as a not-for-profit foundation inand headquartered in Geneva, Switzerland, the Forum is tied to no. Passive Shareholders as a Takeover Defense.

Why Higher Takeover Premia Protect Minority Shareholders. Article. interest between managers and minority shareholders in. A minority shareholder is defined as a shareholder who does not exert control over a company.

The majority shareholders almost always exert an absolute control over the company, its management, its board of directors, and so on. o “Why Higher Takeover Premia Protect Minority Shareholders” with Mike Burkart (LSE) and Fausto Panunzi (U.

Bocconi), Journal of Political Economy () o “On the Strength of Corporate Cultures” with Juan Carrillo (USC), European Economic Review ().

Introduction Reasons for minority Protection. When exploring the issue of protecting minority shareholders, there is a question that eventually arises: why is there are a need for the company law to offer protection to the minority shareholders when all the parties follow the majority rule, or are exercising managerial power.

Consistent with the model, we find evidence of higher valuation of firms in countries with better protection of minority shareholders and in firms with higher cash-flow ownership by the. Companies Registry Notice to. Minority. Shareholders – Takeover (Right of Minority Shareholders to be Bought out by Offeror) Company Number (the Company) 1 Company Name (the.

Company) 2 Name. of the Offeror. 3 This notice is hereby given to the following. Minority. Shareholder of the Company: Name Address 4 Background. On the. day of. In the context of a public takeover, minority shareholders are protected to the extent that the Target Board is duty-bound to obtain competent independent advice on an offer, and, unless otherwise.

Economic efficiency is worse if minority shareholders extract higher premia in freezeouts. Moreover, all freezeout rules induce inefficient takeovers caused by : Ernst Maug. Legal Investor Protection and Takeovers. Why Higher Takeover Premia Protect Minority Shareholders Owners of business groups are often accused of expropriating minority shareholders by.

The first is the rise of schemes of arrangement as an alternative mechanism for effecting takeovers. Schemes have become the mechanism of choice for recommended bids in the UK, and yet they offer significantly less protection to minority shareholders than traditional bids.

The justifications for this discrepancy are by: 2. Fausto Panunzi's research while affiliated with University of Rochester and other places. Why Higher Takeover Premia Protect Minority Shareholders. Citing article.

shareholdings. In a successful takeover, the blockholder tenders all his shares and the small shareholders tender the amount needed such that the post-takeover share value matches the bid price. Compared to a fully dispersed target company, the bidder may have to offer a higher.

Stringent takeover regulation is designed to protect target shareholders from expropriation by bidders by increasing information transparency, providing more opportunity for minority shareholders to participate in a takeover process and eradicating the pressure-to-tender problem, as discussed in Section We would thus expect strict takeover Cited by: 2.

Why Higher Takeover Premia Protect Minority Shareholders with Mike Burkart and Fausto Panunzi, Journal of Political Economy () On the Strength of orporate ultures with Juan Carrillo, European Economic Review () Agency onflicts in Public and Negotiated Transfers of orporate ontrol with Mike BurkartFile Size: KB.

The Shareholders Agreement should set out what happens in the event of a takeover. The agreement can include a clause which states that in the event of a takeover offer, and the majority of shareholders want to sell their shares, as a minority shareholder, you will be able to “tag along” and sell your shares at the same price.

Minority investors take a substantial risk when they take an equity position in a closely held company. They have limited control over the management of the company and don’t have a liquid market to sell their equity should things go wrong.

For this reason, before investing, a minority investor will typically ask for substantial protections [ ]. MINORITY SHAREHOLDERS RIGHT IN INDIA. But if we see today’s scenario in the companies actthen various steps have been taken to protect the minority rights of the shareholder in the company irrespective of the fact whether there is any oppression or mismanagement or any other affected rights of the minority shareholders.

Burkhart, Denis Gromb, & Fausto Panunzi, 'Why Higher Takeover Premia Protect Minority Shareholders' () ; Lucian Bebchuk, John Coates, & Guhan Subramanian, 'The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence, and Policy' () 54 ; Jennifer Arlen & Eric.

Protection of minority shareholders’ rights. The protection of minority shareholder’s rights must be understood within the context of the rules set by the Act, the common law, the Memorandum of Incorporation (MOI) of the Company and the Shareholders Agreement, in the event that a company has a shareholders’ agreement.

35 by the small shareholders free rider behavior, he has little incentives to launch a takeover in the first place.’ If the target company with dispersed ownership was concentrated, there is no impact of MBR in value-increasing takeovers on protection of minority shareholders Situation is different in value-decreasing takeovers.

Rights shield for minority shareholder Reserved or veto or affirmative vote matters or consent rights are a bunch of contractually-agreed matters provided in a joint venture agreement or a shareholders agreement that need consent of all the partners.

niques used by controlling shareholders to eliminate minority sharehold-ers from an enterprise or otherwise oppress them; (3) rights and tactics minority shareholders can use to protect their interests; and (4) advance planning and contractual arrangements that protect minority sharehold-ers.' II.

CAUSES OF SHAREHOLDER DISPUTES. In recent years, corporate stakeholders and academic scholars have expressed increased concern about the expropriation of minority shareholders by controlling shareholders (La Porta et al., ). Johnson et al. () define the term ‘tunnelling’ as the transfer of assets and profits out of firms for the benefit of their controlling Author: Wu Zhonghua.

Date Apr Type:Company Director Magazine Mark Easton explains why directors need to be mindful of their duty to act fairly between shareholders and consider carefully the effect their decisions could have on minority shareholders.

The Corporations Act provides far-reaching remedies for oppressed minority shareholders. Directors should exercise their powers and.

Minority Blocks and Takeover Premia by of a minority blockholder leads to a higher bid price, it also reduces the likelihood of a takeover. Second, The shareholders can respond to R’s offer by either tendering (part of) their shares or retaining them.

There are no further options or choices available to any. Arrangements Which Protect Minority Shareholders Against "Squeeze-Outs" In this Article, Professor O'Neal suggests the preventive means that may be taken to protect the minority share-holders of a corporation from oppression or elimination by other owners of the enterprise.

After discussing many. Minority shareholders: what works to protect shareholder rights. (English) Abstract. The World Bank's assessments of corporate governance practices in 25 countries across five continents have revealed a general commitment to comply with international by: 2.

Why higher takeover premia protect minority shareholders, To submit an update or takedown request for this paper, please submit an Update/Correction/Removal : Anete Pajuste. 28 Financial Management XXXX Burkart, M., D.

Gromb, and F. Panunzi,“Why Higher Takeover Premia Protect Minority Shareholders,” Journal of Political.

protect minority shareholders than those found in developed market economies (Kiseliov, et al. Although great progress has been achieved, especially from the revisions of the Company Law, the provisions in the new laws may still not be good enough to yield thorough protection for the minority shareholders in China.

7File Size: KB. Minority shareholders in their corporation may be concerned with having voice, access to information, some control, return and ability to exit.

In addition, minority investors are often concerned that those in control will act opportunistically and take advantage of their control for personal : Arthur R.

Pinto. First we examine takeover premia for target shareholders. If mandatory voting makes CEOs refrain from overpaying, we expect target shareholders to enjoy higher takeover premia in Class 2 deals relative to Class 1 deals. In Table 7 we examine this possibility by looking at takeover premia for shareholders in a subsample of publicly listed by: What you need to know to protect your Minority Shareholders rights.

By H. Joel Newman. Now more than ever, small businesses can turn suddenly and sharply for better or worse. And, if you’re in a position of little or no control, it’s imperative that you protect yourself and your interests. These proactive measures can help you along the way.