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The role of governments in hostile takeovers – Evidence from regulation, anti-takeover provisions and government interventions

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  • Rowoldt, Maximilian
  • Starke, Dennis

Abstract

This paper addresses the role of governments in hostile takeovers by analysing 263 hostile takeover bids in Europe and North America during 2000–2014. Our results suggest that governments may influence the openness of the domestic hostile takeover market through takeover regulation, potentially implementing protectionism. The corresponding features of the regulatory regime may in turn stimulate the deployment of anti-takeover provisions by entrenched target managers. Rather than increasing takeover premiums, anti-takeover provisions are associated with lower success rates of hostile bids, and may thus harm corporate governance. Governments’ direct intervention in hostile takeovers is more likely in case of a foreign bidder, large transactions, high unemployment and high GDP growth rates, pointing to both protectionist and populist motives. The hostile bid failed in all cases of government intervention identified in our sample. Direct government intervention may thus serve as ultimo ratio in order to block unwanted transactions.

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  • Rowoldt, Maximilian & Starke, Dennis, 2016. "The role of governments in hostile takeovers – Evidence from regulation, anti-takeover provisions and government interventions," International Review of Law and Economics, Elsevier, vol. 47(C), pages 1-15.
    • Handle: RePEc:eee:irlaec:v:47:y:2016:i:c:p:1-15
    DOI: 10.1016/j.irle.2016.03.003
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    2. E. Fedorova A. & M. Chukhlantseva A. & D. Chekrizov V. & ЕЛЕНА Федорова АНАТОЛЬЕВНА & МАРИЯ Чухланцева АЛЕКСАНДРОВНА & ДМИТРИЙ Чекризов ВАСИЛЬЕВИЧ, 2017. "Нормативные значения коэффициентов финансовой устойчивости: особенности видов экономической деятельности // Normative Values of Financial Stability Ratios: Industry-Specific Features," Управленческие науки // Management Science, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 7(2), pages 44-55.
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    More about this item

    Keywords

    Mergers & Acquisitions (M&A); Hostile takeovers; Anti-takeover provisions (ATPs); Government intervention; Protectionism; Corporate governance;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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