The Impact of Investor Protection Law on Takeovers: The Case of Leveraged Buyouts

38 Pages Posted: 5 Mar 2008 Last revised: 22 Oct 2014

See all articles by Jerry Cao

Jerry Cao

Independent

Douglas J. Cumming

Florida Atlantic University

Jeremy Goh

Singapore Management University - Lee Kong Chian School of Business

Meijun Qian

Australian National University (ANU) - College of Business and Economics

Xiaoming Wang

Shanghai University of Finance and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 2014

Abstract

This paper examines the impact of investor protection on the value creation of LBOs. We find that target shareholders’ wealth gain is higher in countries with better investor protection. The impact of investor protection on takeover premium is larger for LBO than non-LBO transactions. We also find evidence suggesting that club LBOs are not priced lower than non-club deals after accounting for endogeneity problem. These results suggest that investor protection law may act as an important safeguard for minority shareholders in LBO transactions.

Keywords: Private Equity, Leveraged Buyouts, Premium, M&A

JEL Classification: G34, G24

Suggested Citation

Cao, Jerry and Cumming, Douglas J. and Goh, Jeremy and Qian, Meijun and Wang, Xiaoming, The Impact of Investor Protection Law on Takeovers: The Case of Leveraged Buyouts (May 2014). Available at SSRN: https://ssrn.com/abstract=1100059 or http://dx.doi.org/10.2139/ssrn.1100059

Jerry Cao (Contact Author)

Independent

No Address Available

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Jeremy Goh

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Meijun Qian

Australian National University (ANU) - College of Business and Economics ( email )

Canberra
Australia

Xiaoming Wang

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

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