Abstract
We study the impact of institutional investors' "voice" on 201 going private tender offers by controlling shareholders ("freeze-out" offers) in Israel. Israeli regulatory intervention in freeze-out tender offers is relatively mild; thus, institutional investors' activism becomes crucial. We find that institutional voice has dual effects. On one hand, when there are pre-negotiations with institutional investors' (their voice is heard), accepted offers' premiums increase. On the other hand, when institutional investors express their voice, yet reject the offer, these rejections appear to hurt shareholders' value. We also document significant institutional investor exit after rejected offers, especially after offers preceded by voice (pre-negotiations with institutional investors).
| Original language | English |
|---|---|
| Article number | 2050002 |
| Journal | Quarterly Journal of Finance |
| Volume | 10 |
| Issue number | 1 |
| DOIs | |
| State | Published - 1 Mar 2020 |
Bibliographical note
Publisher Copyright:© 2020 World Scientific Publishing Company and Midwest Finance Association.
Keywords
- Going private transactions
- bargaining with controlling shareholders
- institutional investors activism
- tender offers