HHL Research Paper Series in Corporate Governance No. 4
24 Pages Posted: 23 Mar 2009 Last revised: 24 May 2012
Date Written: July 12, 2011
We study the certification role of fairness opinions in corporate transactions in a simple non-cooperative setting with asymmetric information and possibly misaligned managerial incentives, and discuss the effect of different regulatory scenarios. Specifically, we compare three settings: one in which no third-party fairness opinion is available, one in which the management is required to obtain a fairness opinion before any transaction, and one in which the management's decision to require a fairness opinion is voluntary. We compare shareholder value in each of the three scenarios and discuss implications for the optimal design of regulatory environments for fairness opinions.
Keywords: Fairness opinion, acquisition, management incentives
JEL Classification: G34, G38, K20
Suggested Citation: Suggested Citation
La Mura, Pierfrancesco and Rapp, Marc Steffen and Schwetzler, Bernhard and Wilms, Andreas, The Certification Hypothesis of Fairness Opinions for Acquiring Firms (July 12, 2011). International Review of Law and Economics, Vol. 31, No. 4, pp. 240-248; HHL Research Paper Series in Corporate Governance No. 4. Available at SSRN: https://ssrn.com/abstract=1366304 or http://dx.doi.org/10.2139/ssrn.1366304