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Sentencing private benefits in takeover contest

At, Christian ; Chappe, Nathalie ; Morand, Pierre-Henri

International Review of Law and Economics, 2004, Vol.24(4), pp.409--424 [Periódico revisado por pares]

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  • Título:
    Sentencing private benefits in takeover contest
  • Autor: At, Christian ; Chappe, Nathalie ; Morand, Pierre-Henri
  • Assuntos: Quantitative Finance ; Humanities and Social Sciences ; Economies and Finances ; Law ; Economics
  • É parte de: International Review of Law and Economics, 2004, Vol.24(4), pp.409--424
  • Descrição: We present a model of profit diversion into a takeover environment. The model incorporates a legal environment characterized by a probability of being convicted, a monetary sanction (ex-ante protection) and the costs of administrating the takeover (ex-post protection). We show that the extraction of private benefits is reduced by the existence of such a legal environment, which is consistent with a number of empirical studies. It also predicts that legal environment can conduct the bidder to acquire more than 50% of the share due to the impact of the final holding of the bidder on the fine. The paper contributes to the current debate on regulation of white-collar crime. It highlights the trade-off between the ex-post profit diversion and minority protection, and the ex-ante probability of efficient takeovers. But, considering simultaneously two tools of protection, the ex-ante and the ex-post ones, which do not have the same impact, we derive some guidelines in order to analyze the current trend of the US and the EU laws.
  • Idioma: Inglês

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