Protecting the weak: Efficacy of mandated auctions in minority buyouts

Ya Dai, Liang Guo and Palani-Rajan Kadapakkam

International Review of Financial Analysis, 2019, vol. 61, issue C, 9-19

Abstract: There is considerable debate among economists and legal scholars about the need for regulatory protection for minority shareholders when controlling shareholders seek to buy them out. We examine the impact of regulatory changes in India which mandated a reverse book building (RBB) process, wherein the buyout price was determined by minority shareholders rather than by the controlling shareholders. Accounting for differences in firm and deal characteristics, we find that the RBB process increased the gains to minority shareholders. Stock price reactions at deal announcement reflect these gains after a learning period during which market participants adjusted to this new mechanism.

Keywords: Minority buyouts; Indian stock markets; Book building process (search for similar items in EconPapers)
JEL-codes: G15 G3 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521918303636
Full text for ScienceDirect subscribers only

Related works:
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:eee:finana:v:61:y:2019:i:c:p:9-19

DOI: 10.1016/j.irfa.2018.11.005

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().