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Financial Tunnelling and the Mandatory Bid Rule*

Published online by Cambridge University Press:  20 August 2009

Jeremy Grant ,
Tom Kirchmaier  and
Jodie A. Kirshner
Jeremy Grant
Affiliation:
Jeremy Grant: University of Cambridge.
Tom Kirchmaier*
Affiliation:
Tom Kirchmaier: Manchester Business School and Financial Markets group, London School of Economics.
Jodie A. Kirshner
Affiliation:
Jodie A. Kirshner: London Business School.
*
**Corresponding address: Manchester Business School, Manchester M15 6PB, UK. Email: [email protected].
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Abstract

In this paper, we use case studies to document how dominant shareholders have circumvented mandatory bid rules to appropriate wealth from minority shareholders. Dominant shareholders are numerous in Continental Europe. Creative compliance with mandatory bid rules reveals the failure of boards and regulators to protect minority shareholders and the difficulties of legislating in this area. We propose enhanced means for protecting their interests.

Keywords

private benefits of control (PBCs)mandatory bid ruletakeovertunnelling
Type
Articles
Information
European Business Organization Law Review (EBOR) , Volume 10 , Issue 2 , June 2009 , pp. 233 - 253
Copyright
Copyright © T.M.C. Asser Press and the Authors 2009

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Footnotes

*

Earlier versions of this paper circulated under the title ‘Financial Tunnelling and the Revenge of the Insider System’. We would like to thank Peter Abell, Bernard Black, Irma Clots-Figueras, Luca Enriques, Rafael Gomez, Christoph Kumpan, Sir Geoffrey Owen, Miguel Segoviano and David Webb for helpful comments on earlier drafts. All remaining errors are our own. The views expressed are purely those of the authors.

References

* Earlier versions of this paper circulated under the title ‘Financial Tunnelling and the Revenge of the Insider System’. We would like to thank Peter Abell, Bernard Black, Irma Clots-Figueras, Luca Enriques, Rafael Gomez, Christoph Kumpan, Sir Geoffrey Owen, Miguel Segoviano and David Webb for helpful comments on earlier drafts. All remaining errors are our own. The views expressed are purely those of the authors.