Why Higher Takeover Premia Protect Minority Shareholders

The effects of takeover threats on shareholders and firm value

We study the role of takeover threats as a corporate control mechanism using [Aghion, P., Tirole, J., 1997. Formal and real authority in organizations. Journal of Political Economy 105, 1–29] model of formal and real authority. Shareholders do not monitor the manager’s actions since ownership is widely dispersed. A corporate raider may monitor and step in if a profit opportunity exists. In our ...

Minority shareholders’ protection in Romanian capital markets: evidence on dividends

Recent studies in Finance suggest dividends’ role as monitoring mechanism, which allows minority shareholders to control the managers or larger shareholders’ decisions. This paper tests this hypothesis on listed companies at Bucharest Stock Exchange, in 2000-2003 period, from the legislation perspective, but, also, using dividend ratios. Even the regulations and the enforcement of the law seem ...

The Evolution of Effective Remedies for Minority Shareholders and Its Impact upon Valuation of Minority Shares

... Such was the plight, we are told, of the minority shareholder. ... While the New Jersey court in Exadaktilos introduced the notion of expectations as a standard by which to measure whether the challenged conduct was oppressive, the reasonable expectations test reached full bloom in New York after the legislature, in 1979, provided for a buy-out of the minority shareholder as an alternative ...

Going Public without Governance: Managerial Reputation Effects

This paper addresses the agency problem between controlling shareholders and minority shareholders. This problem is common among public firms in many countries where the legal system does not effectively protect minority shareholders against oppression by controlling shareholders. We show that even without any explicit corporate governance mechanisms protecting minority shareholders, controllin...

Discretisation-Invariant Swaps and Higher-Moment Risk Premia