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How fair are the fair price standards in blockholder regimes?

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  • Adrian Pop

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

  • Diana Pop

    (GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage)

Abstract

This paper examines the impact of frequent changes of investor protection regulation on the bid premium levels and the reception of the bid by the minority shareholders in blockholder regimes. In order to document the corporate governance function of takeover regulation, we explore a comprehensive data set representing more than 90% of the takeovers organized in Romania between 1998 and 2012. The peculiar institutional framework in Romania allows factoring in the analysis a hitherto unexplored structural element, namely the parallel control transactions managed by the government, outside the stock market structures. After controlling for the influence of corporate governance and ownership attributes of targets, our main findings suggests that various market price components are strong predictors of both bid premiums and tender success. Besides, the alignment of legal details to the requirements of the European takeover regulation has a surprising negative effect on minority claimants. If the shareholders are indeed able to distil the pertinent information about a bid, our overall result suggests that the balance between competing concerns of protecting minority shareholders and facilitating value-creating transactions is still open to debate in emerging markets

Suggested Citation

  • Adrian Pop & Diana Pop, 2014. "How fair are the fair price standards in blockholder regimes?," Working Papers hal-01076722, HAL.
    • Handle: RePEc:hal:wpaper:hal-01076722
    DOI: 10.2139/ssrn.2502011
    Note: View the original document on HAL open archive server: https://hal.science/hal-01076722
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    Keywords

    Takeover regulation; fair price standards; shareholder rights; corporate governance; privatization; takeover premium;
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