Legal Investor Protection and Takeovers

  title={Legal Investor Protection and Takeovers},
  author={Mike C. Burkart and Denis Gromb and H. Mueller and F. Panunzi},
  journal={Corporate Finance: Governance},
  • Mike C. Burkart, Denis Gromb, +1 author F. Panunzi
  • Published 2011
  • Business, Economics
  • Corporate Finance: Governance
  • This paper examines the role of legal investor protection for the efficiency of the market for corporate control when bidders are financially constrained. In the model, stronger legal investor protection increases bidders' outside funding capacity. However, absent effective bidding competition, this does not improve efficiency, as the bid price, and thus bidders' need for funds, increases one-for-one with the pledgeable income. In contrast, under effective competition for the target, the… CONTINUE READING
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