References (49)



Advising Shareholders in Takeovers

Doron Levit

University of Pennsylvania - Finance Department

January 2014

This paper studies the advisory role of the board in takeovers. Corporate boards can alert target shareholders when a takeover offer is inadequate and assist them to coordinate their collective decision. The analysis relates the characteristics of the bidder and the target firm to the influence the board has on target shareholders and the value of their shares, and shows that they can both increase with the board's bias. Importantly, the board can be effective even if in equilibrium its recommendation is uninformative and ignored by shareholders. The analysis also provides a novel rationale against the use of takeover defenses.

Number of Pages in PDF File: 73

Keywords: Takeover, Tender Offer, Merger, Advice, Communication, Recommendation, Board of Directors, Cheap-Talk, Coordination, Free-riding

JEL Classification: D82, D83, G34

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Date posted: June 20, 2011 ; Last revised: January 31, 2014

Suggested Citation

Levit, Doron, Advising Shareholders in Takeovers (January 2014). Available at SSRN: https://ssrn.com/abstract=1866379 or http://dx.doi.org/10.2139/ssrn.1866379

Contact Information

Doron Levit (Contact Author)
University of Pennsylvania - Finance Department ( email )
The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

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References:  49