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

26 Pages Posted: 25 Dec 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

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Abstract

Despite mixed stock returns for acquirer shareholders in large stock-for-stock mergers, acquiring-firm merger proxy votes rarely fail; in the sample we examine, the average approval rate of votes cast is 95%. Our examination of whether merger votes are effective in monitoring management's acquisition policy indicates that the margin of approval varies substantially with firm and deal characteristics, and while there are no failed votes in our sample some deals are only narrowly approved. These findings support the notion that merger proxy votes provide credible threats despite high average approval rates.

Suggested Citation

Burch, Timothy R. and Morgan, Angela and Wolf, Jack G., Is Acquiring-Firm Shareholder Approval in Stock-for-Stock Mergers Perfunctory?. Available at SSRN: https://ssrn.com/abstract=635021

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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