IDEAS home Printed from https://ideas.repec.org/a/ucp/jlawec/doi10.1086-692585.html
   My bibliography  Save this article

The Effect of Prohibiting Deal Protection in Mergers and Acquisitions: Evidence from the United Kingdom

Author

Listed:
  • Fernán Restrepo
  • Guhan Subramanian

Abstract

Since 2011, the United Kingdom has prohibited all deal protections--including termination fees--in mergers and acquisitions (M&A) deals. We examine the effect of this regulatory change on deal volumes, the incidence of competing offers, deal-jumping rates, deal premiums, and completion rates in the United Kingdom relative to the other European Group of 10 (G-10) countries. We find that M&A deal volumes in the United Kingdom declined significantly in the aftermath of the 2011 reform (in absolute terms and relative to deal volumes in other European G-10 countries). We find no countervailing benefits to targets' shareholders in the form of higher deal premiums or more competing bids. Completion rates and deal-jumping rates also remained unchanged. Our results suggest that deal protections provide an important social welfare benefit by facilitating the initiation of M&A deals.

Suggested Citation

  • Fernán Restrepo & Guhan Subramanian, 2017. "The Effect of Prohibiting Deal Protection in Mergers and Acquisitions: Evidence from the United Kingdom," Journal of Law and Economics, University of Chicago Press, vol. 60(1), pages 75-113.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/692585
    DOI: 10.1086/692585
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/692585
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/692585
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/692585?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wafa Tariq Waqar & Yan Ma, 2024. "Acquirers’ corporate governance ratings and the likelihood of deal completion: Do stakeholders care about the agency hazards of European cross-border acquirers?," Review of Managerial Science, Springer, vol. 18(10), pages 2815-2848, October.
    2. Kumar, Deepak & Sengupta, Keya & Bhattacharya, Mousumi, 2023. "Macroeconomic influences on M&A deal outcomes: An analysis of domestic and cross-border M&As in developed and emerging economies," Journal of Business Research, Elsevier, vol. 161(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:doi:10.1086/692585. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.