Does Revlon Matter? An Empirical and Theoretical Study
66 Pages Posted: 12 Jul 2019 Last revised: 4 Sep 2019
Date Written: July 10, 2019
We empirically examine whether and how the doctrine of enhanced judicial scrutiny that emerged from Revlon and its progeny actually affects M&A transactions. Combining hand-coding and machinelearning techniques, we assemble data from the proxy statements of publicly announced mergers over a fifteen year period, 2003-2017, ultimately assembling a dataset of 1,913 unique transactions. Of these, 1,167 transactions are subject to the Revlon standard, and 553 are not. After subjecting this sample to empirical analysis, our results show that Revlon does indeed matter for companies incorporated in Delaware. We find that for Delaware Revlon deals are more intensely negotiated, involve more bidders, and result in higher transaction premiums than non-Revlon deals. However, these results do not hold for target companies incorporated in other jurisdictions that have adopted the Revlon doctrine.
Keywords: Corporate Law, M&A, enhanced scrutiny, Revlon duties, takeovers, merger litigation, Corwin, Fiduciary Duties, Delaware, empirical, machine learning, negotiation process, deal premium
JEL Classification: K22
Suggested Citation: Suggested Citation