The Effect of Institutional Investors' Voice on the Terms and Outcome of Freeze-out Tender Offers

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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 languageEnglish
Article number2050002
JournalQuarterly Journal of Finance
Issue number1
StatePublished - 1 Mar 2020

Bibliographical note

Funding Information:
We have benefited from the comments of Lucian Bebchuk, Bernie Black, Janis Brezins, Asaf Eckstein, Miriam Schwartz-Ziv, the journal referee and especially the Editor (Jean Helwege). Presentations at Bar Ilan University, the 2017 Ackerman Corporate Governance Conference, and the 2019 ECGI Roundtable on "Why are Fewer Companies Going Public?" were also extremely useful. All remaining errors are our own. Financial support by the Raymond Ackerman Family Chair in Israeli Corporate Governance is gratefully acknowledged.

Publisher Copyright:
© 2020 World Scientific Publishing Company and Midwest Finance Association.


  • Going private transactions
  • bargaining with controlling shareholders
  • institutional investors activism
  • tender offers


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