Minority Shareholders Protection and the Regulation of Control Block Transfers: The Case of the Partial Opportunity Rule
Posted: 6 Sep 1999
Abstract
The paper analyses the implications in terms of minority shareholder protection of the regulation on control block trades (defined as partial opportunity rule or POR) that requires the buyer (new controlling party) to offer to buy from minority shareholders the same number of shares at the same price of the block transaction. Following Bebchuk (1994), we develop a simple model that explains how, under this regulatory regime, the different motivations behind the acquisition of a firm affect the wealth of the acquired company's shareholders. We test some of the implications of the model with the data on control block sales executed on the Milan Stock Exchange during the period of application of the POR (1992-1996).
JEL Classification: G38, G34
Suggested Citation: Suggested Citation