The Societas Europaea: Good News for European Firms
31 Pages Posted: 25 May 2009 Last revised: 10 Oct 2010
Date Written: July 1, 2009
When Council Regulation (EC) No 2157/2001 on the Statute for a European Company (Societas Europaea - SE) became effective on 8 October 2004, it offered publicly traded companies, for the first time, a choice between competing company laws, namely the national law of the company’s home state and the law of the supranational SE. Using an event study methodology, we analyse a unique dataset of publicly traded firms that have announced to re-incorporate under the SE Regulation. We find the re-incorporation decision to have a positive impact on firms’ stock market value. The abnormal returns associated with re-incorporating as an SE increase over the years, which we interpret as the result of declining legal uncertainty and a rising reputational value of the SE corporate form.
Keywords: event study, Societas Europaea, European Company, EC company law, incorporation, charter competition, regulatory competition, legal arbitrage
JEL Classification: G34, G38, K22
Suggested Citation: Suggested Citation