Does Mandatory Shareholder Voting Prevent Bad Acquisitions?

Marco Becht, Andrea Polo and Stefano Rossi

The Review of Financial Studies, 2016, vol. 29, issue 11, 3035-3067

Abstract: Shareholder voting on corporate acquisitions is controversial. In most countries, acquisition decisions are delegated to boards, and shareholder approval is discretionary, which makes existing empirical studies inconclusive. We study the U.K. setting in which shareholder approval is imposed exogenously via a threshold test that provides strong identification. U.K. shareholders gain 8 cents per dollar at announcement with mandatory voting, or $\$13.6$ billion over 1992–2010 in aggregate; without voting, U.K. shareholders lost $\$3$ billion. Multidimensional regression discontinuity analysis supports a causal interpretation. The evidence suggests that mandatory voting imposes a binding constraint on acquirer chief executive officers.Received October 22, 2015; accepted May 11, 2016, by Editor David Denis.

JEL-codes: G34 K22 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
http://hdl.handle.net/10.1093/rfs/hhw045 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Does Mandatory Shareholder Voting Prevent Bad Acquisitions? (2015)
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:oup:rfinst:v:29:y:2016:i:11:p:3035-3067.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Review of Financial Studies is currently edited by Itay Goldstein

More articles in The Review of Financial Studies from Society for Financial Studies Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().