How fair are the fair price standards in blockholder regimes?

This paper examines the impact of frequent changes of investor protection regulation on the bid premium levels and the reception of the bid by the minority shareholders in blockholder regimes. In order to document the corporate governance function of takeover regulation, we explore a comprehensive data set representing more than 90% of the takeovers organized in Romania between 1998 and 2012. The peculiar institutional framework in Romania allows to factor in the analysis an hitherto unexplored structural element, namely the parallel control transactions managed by the Government, outside the stock market structures. After controlling for the influence of corporate governance and ownership attributes of targets, our main findings suggest that various market price components are strong predictors of both bid premiums and tender success. Besides, the alignment of legal details to the requirements of the European takeover regulation has a surprising negative effect on minority claimants. If the shareholders are indeed able to distil the pertinent information about a bid, our overall result suggests that the balance # University of Nantes (LEMNA), Chemin de la Censive du Tertre, BP 52231, 44322 Nantes Cedex 3, France. Tel.: +33-2-2-40141650. E-mail: [email protected] * University of Angers (GRANEM), 13 Allée François Mitterrand, BP 13633, 49036 Angers Cedex 01, France. Tel.: +33-2-41-96-21-24 -2-41-96-21-96. E-mail: [email protected] (corresponding author) Acknowledgements We are indebted to Azizjon Alimov, Paul Frentrop and participants at the 1 st Academic Conference of the International Corporate Governance Network, the 6 th International Conference of the International Finance and Banking Society and the 2014 Annual Conference of the Asian Finance Association for useful comments and ! " # $ % & ' ## Romanian Universe for helping with data. A. Pop gratefully acknowledges financial support from the Chaire Finance of the University of Nantes Research Foundation. D. Pop gratefully acknowledges financial support from the Rules and Markets Chaire – GRANEM of the University of Angers. between competing concerns of protecting minority shareholders and facilitating value-creating transactions is still open to debate in emerging markets. JEL Classification: G32, G34, G38