Public and Private Enforcement of Securities Laws: Resource-Based Evidence

Jackson, Howell E.; Roe, Mark J.

doi:10.2139/ssrn.1000086

Cited by 65 publications

(30 citation statements)

References 12 publications

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“…The positive effect of the ownership disclosure rule on combined wealth gains suggests that potential overbidding (Burkart, 1995(Burkart, , 1999 does not diminish the efficiency of the market for corporate control (see section 5.2.1). Our results further support the positive relationship between investor protection through disclosure and financial market development found in the literature (Jackson and Roe, 2009). In addition, the empirical finding on the mandatory bid rule supports the view that the mandatory bid rule increases the efficiency of the takeover market by generating value-creating bids While the effect of takeover law on combined shareholder wealth is positive and significant in the whole sample of takeovers, Table 3 draws attention to the development of takeover law in the UK: Amongst the sixteen major European countries, the UK provides a relatively high protection for minority shareholders throughout the sample period and -because of its relatively large contribution to our sample of takeovers -may have a large impact on our results.…”

supporting

confidence: 91%

Takeover law to protect shareholders: Increasing efficiency or merely redistributing gains?

Wang

Lahr

2017

Journal of Corporate Finance

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We construct a dynamic takeover law index using hand-collected data on legal provisions and empirically examine the effect of takeover regulation to protect shareholders on shareholder wealth for bidders and targets in a multi-country setting. We find that a stricter takeover law increases combined wealth for bidders and targets, which suggests that stronger shareholder protection in the takeover bid process increases the efficiency of the takeover market. Contrary to our hypothesis, results show that stricter takeover law does not hurt bidders. Its effect on target announcement returns and takeover premiums is significantly positive and economically large. Our findings suggest that the mandatory bid rule and ownership disclosure increase synergistic gains in takeovers, whilst the fair-price rule and squeeze-out rights may reduce combined gains. Further results show that increased overall gains can be explained by greater competition in the market for corporate control and a shorter time to successful completion of a takeover under stricter takeover law. KeywordsTakeover laws, Mergers and acquisitions, Shareholder protection, Announcement returns, EU takeover directive JEL classification G32, G34, G38, K22, O16 AcknowledgementsWe thank

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supporting

confidence: 91%

Takeover law to protect shareholders: Increasing efficiency or merely redistributing gains?

Wang

Lahr

2017

Journal of Corporate Finance

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“…Involved in these policies are two controversial topics: globalization versus nationalization, and government involvement in the corporate world. The law and economics/finance literature is fairly consistent in their conclusion that legal institutions, both public and private (La Porta et al, 2006;Jackson & Roe, 2009;Cumming, Knill, & Richardson, 2015), are good for firm access to capital and financial development in general.…”

Section: Mobility Of Governancementioning

confidence: 97%

Law, finance, and the international mobility of corporate governance

et al. 2017

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We introduce the topic of this Special Issue on the ''Role of Financial and Legal Institutions in International Governance'', with a particular emphasis on a notion of ''international mobility of corporate governance''. Our discussion places the Special Issue at the intersection of law, finance, and international business, with a focus on the contexts of foreign investors and directors. Country-level legal and regulatory institutions facilitate foreign ownership, foreign directors, raising external financial capital, and international M&A activity. The interplay between the impact of foreign ownership and foreign directors on firm governance and performance depends on international differences in formal/regulatory institutions. In addition to legal conditions, informal institutions such as political connections also shape the economic value of foreign ownership and foreign directors. We highlight key papers in the literature, provide an overview of the new papers in this Special Issue, and offer suggestions for future research.

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“…Securities laws in general and disclosure rules in particular, which La Porta et al (2006) show to provide some of the most effective investor protections, are entirely statutory. Jackson and Roe (2007) further argue that the budgets and staffing levels of securities regulators, which are higher in common law countries, predict financial development. Is this evidence consistent with Legal Origins Theory?…”

Section: The Evidence On Government Regulation Is Consistent With Thementioning

confidence: 99%

The Economic Consequences of Legal Origins

Porta¹,

Silanes²,

Shleifer³

2007

308

148

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In the last decade, economists have produced a considerable body of research suggesting that the historical origin of a country's laws is highly correlated with a broad range of its legal rules and regulations, as well as with economic outcomes. We summarize this evidence and attempt a unified interpretation. We also address several objections to the empirical claim that legal origins matter. Finally, we assess the implications of this research for economic reform. * We are grateful to

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Public and Private Enforcement of Securities Laws: Resource-Based Evidence

Cited by 65 publications

References 12 publications

Takeover law to protect shareholders: Increasing efficiency or merely redistributing gains?

Takeover law to protect shareholders: Increasing efficiency or merely redistributing gains?

Law, finance, and the international mobility of corporate governance

The Economic Consequences of Legal Origins

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