Merger Negotiations in the Shadow of Judicial Appraisal

45 Pages Posted: 21 Sep 2017 Last revised: 22 Mar 2019

See all articles by Audra L. Boone

Audra L. Boone

Texas Christian University - M.J. Neeley School of Business; European Corporate Governance Institute (ECGI)

Brian J. Broughman

Vanderbilt University Law School

Antonio J. Macias

Baylor University

Date Written: March 14, 2019


The recent surge in appraisal litigation has sparked debate over the desirability of appraisal and how this remedy should be structured. Much of this debate is based on untested assertions about appraisal’s ex-ante effect on the structure and pricing of takeovers. Systematically investigating this effect, we find evidence that target shareholders receive higher abnormal returns as the strength of the appraisal remedy increases. We find no evidence that bidders offer a lower up-front price as a means to pay off dissenting shareholders post sale. Furthermore, threat of appraisal does not appear to limit takeover activity or impact method of payment. Overall, our results suggest that appraisal provides an important ex-ante protection for target firm shareholders.

Keywords: Appraisal, Mergers, Appraisal Arbitrage

JEL Classification: K22, G34

Suggested Citation

Boone, Audra and Broughman, Brian J. and Macias, Antonio J., Merger Negotiations in the Shadow of Judicial Appraisal (March 14, 2019). Indiana Legal Studies Research Paper No. 381, Available at SSRN: or

Audra Boone

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

Fort Worth, TX 76129
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Brian J. Broughman (Contact Author)

Vanderbilt University Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States

Antonio J. Macias

Baylor University ( email )

Waco, TX 76798
United States

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