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Media type:
E-Article
Title:
Takeovers, Market Monitoring, and International Corporate Governance
Contributor:
Kumar, Praveen;
Ramchand, Latha
Published:
Wiley Periodicals, Inc., 2008
Published in:
The RAND Journal of Economics, 39 (2008) 3, Seite 850-874
Language:
English
ISSN:
0741-6261
Origination:
Footnote:
Description:
<p>We theoretically and empirically examine the role of international takeover markets in curtailing dominant shareholder moral hazard for firms with higher value-added from acquisitions. In equilibrium, such firms strategically list shares in the markets of their targets and voluntarily dilute dominant shareholder control through capital-raising events to lower their expected acquisition costs. Empirical tests, using a sample of foreign firms cross-listing on U.S. stock exchanges during 1990-2003, support the framework. We find a strong influence of post-listing dilution of dominant shareholder control through capital-raising events on the likelihood of acquisitions and their cost to the acquirers, in both U.S. and non-U.S. markets.</p>