The Development of the Takeover Auction Process: The Evolution of Property Rights in the Modern Wild West

66 Pages Posted: 13 Feb 2018 Last revised: 27 Mar 2021

See all articles by Tingting Liu

Tingting Liu

Iowa State University

J. Harold Mulherin

University of Georgia - Department of Banking and Finance

William O. Brown

University of North Carolina (UNC) at Greensboro

Date Written: January 29, 2018

Abstract

Using unique, hand-collected data, we study the interaction between the legal system and the takeover auction process from 1981 to 2015. We show a structural break in the takeover process in 1989. The strengthening of the property rights of target boards after Time Inc. decision has moved the auction process from public to a behind the scenes process where target boards control both the number of bidders and the flow of information. Target boards are more likely to initiate the auction themselves and the length of the private negotiation process has significantly lengthened. This fundamental change has benefited target shareholders.

Keywords: Takeover auction, property rights, underground auction, target premiums

JEL Classification: G34, G38

Suggested Citation

Liu, Tingting and Mulherin, J. Harold and Brown, William O., The Development of the Takeover Auction Process: The Evolution of Property Rights in the Modern Wild West (January 29, 2018). Available at SSRN: https://ssrn.com/abstract=3112724 or http://dx.doi.org/10.2139/ssrn.3112724

Tingting Liu (Contact Author)

Iowa State University ( email )

2330 Gerdin Business Building
Ames, IA 50011
United States

J. Harold Mulherin

University of Georgia - Department of Banking and Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States
706-542-3644 (Phone)

William O. Brown

University of North Carolina (UNC) at Greensboro ( email )

Bryan School of Business
PO Box 26165
Greensboro, NC 274026165
United States
336-256-0110 (Phone)

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