The role of governments in hostile takeovers – Evidence from regulation, anti-takeover provisions and government interventions

Maximilian Rowoldt and Dennis Starke

International Review of Law and Economics, 2016, vol. 47, issue C, 1-15

Abstract: This paper addresses the role of governments in hostile takeovers by analysing 263 hostile takeover bids in Europe and North America during 2000–2014. Our results suggest that governments may influence the openness of the domestic hostile takeover market through takeover regulation, potentially implementing protectionism. The corresponding features of the regulatory regime may in turn stimulate the deployment of anti-takeover provisions by entrenched target managers. Rather than increasing takeover premiums, anti-takeover provisions are associated with lower success rates of hostile bids, and may thus harm corporate governance. Governments’ direct intervention in hostile takeovers is more likely in case of a foreign bidder, large transactions, high unemployment and high GDP growth rates, pointing to both protectionist and populist motives. The hostile bid failed in all cases of government intervention identified in our sample. Direct government intervention may thus serve as ultimo ratio in order to block unwanted transactions.

Keywords: Mergers & Acquisitions (M&A); Hostile takeovers; Anti-takeover provisions (ATPs); Government intervention; Protectionism; Corporate governance (search for similar items in EconPapers)
JEL-codes: G28 G34 G38 K22 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:47:y:2016:i:c:p:1-15

DOI: 10.1016/j.irle.2016.03.003

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