The Uncertain Case for Appraisal Arbitrage
49 Pages Posted: 17 Sep 2018
Date Written: April 21, 2017
This Article presents a skeptical, though not dismissive, view of appraisal arbitrage. While there are benefits associated with appraisal litigation, the Article introduces both economic theory and empirical evidence demonstrating that increased levels of appraisal arbitrage also create efficiency costs and distributional concerns. Given the need to balance these costs and benefits, the Article presents a principled basis for modifying the appraisal litigation process to allow for privately ordered fee-shifting: target companies can opt-out of the American Rule in exchange for a heightened burden of proof.
Keywords: Appraisal Rights, Appraisal Arbitrage, M&A Litigation, Fee Shifting, American Rule, Delaware, Private Ordering
JEL Classification: K00, K20, K22, K40, K41
Suggested Citation: Suggested Citation