Beyond the Rational Behavior: The Non-Financial Variables That Condition Shareholders' Actions on a Takeover
Forthcoming, Journal of Economic Policy Reform, DOI: 10.1080/17487870.2017.1316504.
29 Pages Posted: 31 May 2017
Date Written: May 25, 2017
This article provides experimental evidence that bidder and target shareholders of a takeover announcement exhibit differences in their actions explained by individual traits and by the environment in which investors must decide. These variables should be considered when designing an adequate investor protection policy. Before the crisis, investor protection regulation was based on the rational behaviour hypothesis and characterized by an overreliance on disclosure and financial literacy strategies. However, the new European policy on financial services has acknowledged the lack of adequate protection, and has increased transparency and access to information for investors in MIFID II and MiFIR.
Keywords: Investor Protection Policy, Decision-Making, Takeover, Cognitive Model
JEL Classification: D83, G14, G34
Suggested Citation: Suggested Citation