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Shareholder approval thresholds in acquisitions: Evidence from tender offers

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  • Boone, Audra
  • Broughman, Brian
  • Macias, Antonio J.

Abstract

We exploit a 2013 Delaware law that reduces the shareholder support threshold for two-step tender offers to investigate the impact of differing levels of shareholder support on deal structures and outcomes. After the legal change, Delaware acquisitions, as opposed to other states, are more likely to be completed via tender offer, and Delaware targets collectively receive greater acquisition premiums and returns relative to firms incorporated in other states. Our results caution that supermajority shareholder approval thresholds can increase the risk of shareholder holdup and have little (if any) effect on managerial self-dealing.

Suggested Citation

  • Boone, Audra & Broughman, Brian & Macias, Antonio J., 2018. "Shareholder approval thresholds in acquisitions: Evidence from tender offers," Journal of Corporate Finance, Elsevier, vol. 53(C), pages 225-245.
    • Handle: RePEc:eee:corfin:v:53:y:2018:i:c:p:225-245
    DOI: 10.1016/j.jcorpfin.2018.10.005
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    More about this item

    Keywords

    Shareholder voting; Tender offer; Mergers; Acquisitions; Delaware law;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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