Agency Conflicts in Public and Negotiated Transfers of Corporate Control

Mike Burkart, Denis Gromb and Fausto Panunzi

Journal of Finance, 2000, vol. 55, issue 2, 647-677

Abstract: We analyze control transfers in firms with a dominant minority blockholder and otherwise dispersed owners, and show that the transaction mode is important. Negotiated block trades preserve a low level of ownership concentration, inducing more inefficient extraction of private benefits. In contrast, public acquisitions increase ownership concentration, resulting in fewer private benefits and higher firm value. Within our model, the incumbent and new controlling party prefer to trade the block because of the dispersed shareholders' free‐riding behavior. We also explore the regulatory implications of this agency problem and its impact on the terms of block trades.

Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (74)

Downloads: (external link)
https://doi.org/10.1111/0022-1082.00222

Related works:
Working Paper: Agency conflicts in public and negotiated transfers of corporate control (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:55:y:2000:i:2:p:647-677

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().