Shareholder Decision Rights in Acquisitions: Evidence from Tender Offers

51 Pages Posted: 11 Jul 2015 Last revised: 9 Jan 2018

See all articles by Audra L. Boone

Audra L. Boone

Texas Christian University - M.J. Neeley School of Business

Brian J. Broughman

Indiana University Maurer School of Law

Antonio J. Macias

Baylor University

Date Written: December 19, 2017

Abstract

We exploit a 2013 Delaware law that reduces the shareholder support threshold for two-step tender offers to investigate the impact of differing levels of shareholder support on deal structures and outcomes. After the legal change, Delaware acquisitions, as opposed to other states, are more likely to be completed via tender offer, and Delaware targets collectively receive greater acquisition premiums and returns relative to firms incorporated in other states. Our results caution that supermajority shareholder approval thresholds can increase the risk of shareholder holdup and have little (if any) effect on managerial self-dealing.

Keywords: Merger, Tender Offer, Acquisitions, M&A, Supermajority, Shareholder Voting, Shareholder Approval, Delaware Law

JEL Classification: G14, G34, G38, K22

Suggested Citation

Boone, Audra and Broughman, Brian J. and Macias, Antonio J., Shareholder Decision Rights in Acquisitions: Evidence from Tender Offers (December 19, 2017). Indiana Legal Studies Research Paper No. 331. Available at SSRN: https://ssrn.com/abstract=2629424 or http://dx.doi.org/10.2139/ssrn.2629424

Audra Boone

Texas Christian University - M.J. Neeley School of Business ( email )

Fort Worth, TX 76129
United States

Brian J. Broughman (Contact Author)

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States

Antonio J. Macias

Baylor University ( email )

Waco, TX 76798
United States

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