Is Acquiring-Firm Shareholder Approval in Stock-for-Stock Mergers Perfunctory?

44 Pages Posted: 2 Jun 2004

See all articles by Timothy R. Burch

Timothy R. Burch

University of Miami - Department of Finance

Angela Morgan

Clemson University - Department of Finance

Jack G. Wolf

Clemson University - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: May 2004

Abstract

Despite mixed stock returns for acquirer shareholders in large stock-for-stock mergers, acquiring-firm merger proxy votes rarely fail, and in our sample the average approval out of votes cast exceeds 95%. We seek to determine whether such votes are effective in monitoring management's acquisition policy or are merely perfunctory. We find that the margin of approval varies substantially with firm and deal characteristics. Furthermore, while our sample does not contain failed votes, some deals are only narrowly approved. These findings support the notion that merger proxy votes provide credible threats.

Keywords: Merger proxy votes, mergers and acquisitions

JEL Classification: G34

Suggested Citation

Burch, Timothy R. and Morgan, Angela and Wolf, Jack G., Is Acquiring-Firm Shareholder Approval in Stock-for-Stock Mergers Perfunctory? (May 2004). Available at SSRN: https://ssrn.com/abstract=552763 or http://dx.doi.org/10.2139/ssrn.552763

Timothy R. Burch (Contact Author)

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
305-284-1509 (Phone)
305-284-4800 (Fax)

HOME PAGE: http://www.bus.miami.edu/~tburch

Angela Morgan

Clemson University - Department of Finance ( email )

Clemson, SC 29634
United States
(864) 656-2249 (Phone)
(864) 656-3748 (Fax)

Jack G. Wolf

Clemson University - Department of Finance ( email )

324-A Sirrine Hall
Clemson, SC 29634
United States
864-656-3954 (Phone)
864-656-3748 (Fax)

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