Discussion Paper Details
Please find the details for DP10506 in an easy to copy and paste format below:
Title: Does Mandatory Shareholder Voting Prevent Bad Acquisitions?
Author(s): Marco Becht, Andrea Polo and Stefano Rossi
Publication Date: March 2015
Keyword(s): corporate acquisitions, corporate governance and shareholder voting
Programme Area(s): Financial Economics
Abstract: Previous studies of voting on acquisitions are inconclusive because shareholder approval in the United States is discretionary for management. We study the U.K. where approval is mandatory for deals that exceed a multivariate relative size threshold. We find that in the U.K. shareholders gain 8 cents per dollar at announcement with mandatory voting, or $13.6 billion over 1992-2010 in aggregate; without voting U.K. shareholders lost $3 billion. U.S. shareholders lost $214 billion in matched deals. Differences-in-differences and regression discontinuity analyses support a causal interpretation. The evidence suggests that mandatory voting imposes a binding constraint on acquirer CEOs.
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Becht, M, Polo, A and Rossi, S. 2015. 'Does Mandatory Shareholder Voting Prevent Bad Acquisitions?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10506