The certification hypothesis of fairness opinions for acquiring firms

Pierfrancesco La Mura, Marc Steffen Rapp, Bernhard Schwetzler and Andreas Wilms

International Review of Law and Economics, 2011, vol. 31, issue 4, 240-248

Abstract: We study the certification role of fairness opinions in corporate transactions in a simple non-cooperative setting with asymmetric information and possibly misaligned managerial incentives, and discuss the effect of different regulatory scenarios. Specifically, we compare three settings: one in which no third-party fairness opinion is available, one in which the management is required to obtain a fairness opinion before any transaction, and one in which the management’s decision to require a fairness opinion is voluntary. We compare shareholder value in each of the three scenarios and discuss implications for the optimal design of regulatory environments for fairness opinions.

Keywords: Fairness opinion; Acquisition; Management incentives (search for similar items in EconPapers)
JEL-codes: G34 G38 K20 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:31:y:2011:i:4:p:240-248

DOI: 10.1016/j.irle.2011.07.004

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