Linear voting rule limitation strategy to reduce the power of a unique new comer in a firm's capital
AbstractIn all the defensive measures against takeover bids, those based on rules limiting voting rights are generally cited as the most effective. Ironically, the supposed efficacy seems to have never been tested or modeled. This is precisely the subject of our article that focuses in terms of theoretical performance and limitations of the anti-takeover linear limitation of voting rights in the presence of a single-averse investor. If it is easily shown that this type of device can effectively counter any hostile takeover, this result is generally obtained with a setting that sends a wrong signal to the market in terms of governance. In any situation of anticipated hostile takeover, the paper proposes to determine the optimum configuration of the device. This new setting should help counter a hostile investor acting alone but must remain light enough to maintain market confidence and investors and to allow the holding of general meetings in good conditions.
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Bibliographic InfoPaper provided by Department of Research, Ipag Business School in its series Working Papers with number 1.
Length: 19 pages
Date of creation: 01 May 2013
Date of revision:
Takeover bids; Anti-takeover Amendments; Corporate governance.;
Find related papers by JEL classification:
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
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