Inefficient Sales of Corporate Control Under Mandatory Bid Rule

32 Pages Posted: 20 Mar 2015

See all articles by Hidefusa Iida

Hidefusa Iida

University of Tokyo - Faculty of Law

Date Written: March 20, 2015

Abstract

Separating the value-increasing takeovers from the value-decreasing takeovers is the ideal goal in designing the legal rule on takeovers. The previous studies showed that the Mandatory Bid Rule stops all of the inefficient sales of corporate control. However, this paper, by using the negative private benefits model, refutes this proposition which assumes that private benefits of control are positive. To justify the assumption of negative private benefits, this study examines two events that the standard model cannot explain, but the negative private benefits model does. The Mandatory Bid Rule is not a perfect screen to stop inefficient takeovers.

Keywords: takeover, mandatory bid rule, private benefits of control

JEL Classification: G34, K22

Suggested Citation

Iida, Hidefusa, Inefficient Sales of Corporate Control Under Mandatory Bid Rule (March 20, 2015). Available at SSRN: https://ssrn.com/abstract=2581374 or http://dx.doi.org/10.2139/ssrn.2581374

Hidefusa Iida (Contact Author)

University of Tokyo - Faculty of Law ( email )

7-3-1 Hongo Bunkyo-Ku
Tokyo, 113
Japan

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