Financial Tunnelling and the Mandatory Bid Rule

FMG Discussion Paper No. 536

20 Pages Posted: 4 Nov 2004 Last revised: 30 Jan 2009

See all articles by Tom Kirchmaier

Tom Kirchmaier

London School of Economics - Centre for Economic Performance; Copenhagen Business School

Jeremy Grant

London School of Economics

Jodie A. Kirshner

University of Cambridge

Date Written: January 2009

Abstract

In this paper we use clinical studies to document how dominant shareholders have circumvented mandatory bid rules to appropriate wealth from minority shareholders. Dominant shareholders are numerous in continental Europe. Creative compliance with mandatory bid rules reveals the failure of boards and regulators to protect minority shareholders and the difficulties of legislating in this area. We propose enhanced means for protecting their interests.

Keywords: mandatory bid Rule, MBR, minority shareholders, financial tunneling, block holder, corporate governance

JEL Classification: G34, G32

Suggested Citation

Kirchmaier, Tom and Grant, Jeremy and Kirshner, Jodie A., Financial Tunnelling and the Mandatory Bid Rule (January 2009). FMG Discussion Paper No. 536. Available at SSRN: https://ssrn.com/abstract=613945 or http://dx.doi.org/10.2139/ssrn.613945

Tom Kirchmaier (Contact Author)

London School of Economics - Centre for Economic Performance ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 207 955 6854 (Phone)

HOME PAGE: http://https://sites.google.com/site/tomkirchmaier/home

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Jeremy Grant

London School of Economics ( email )

Houghton St
London, WC2A 2AE
United Kingdom

Jodie A. Kirshner

University of Cambridge ( email )

Cambridge, CB3 0DS
United Kingdom

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