Publication Type
Journal Article
Version
acceptedVersion
Publication Date
1-2018
Abstract
Squeeze-out transactions are controversial as the controlling shareholders may expropriate the minorities’ shareholdings at unattractive prices. Existing scholarship has focused on the optimal approach towards regulating such transactions in the US and the UK, which have widely dispersed public shareholdings, but little attention is placed on jurisdictions with concentrated shareholdings, which may necessitate a different approach given that the prospects of expropriation are very high. This article fills the gap by examining Hong Kong and Singapore, which have concentrated shareholdings. Notwithstanding the fact that they have adapted their corporate and securities laws from the UK, Hong Kong ultimately provides greater minority shareholder protection than Singapore.
We present empirical evidence that the differences in regulation have led to a smaller number of squeeze-outs but higher premium payable to minority shareholders in Hong Kong, as compared to Singapore. However, Hong Kong firms experience higher levels of related party transactions prior to the squeeze-outs, which represent another form of tunnelling. We explain that the differences in regulation and discuss the normative implications of our findings. Our study contributes to the broader literature that “law matters” and provides case studies of how interest group politics shape the evolvement of laws and regulation.
Keywords
Squeeze-outs, delistings, going private transactions, controlling shareholders, takeovers; Hong Kong; Singapore
Discipline
Asian Studies | Commercial Law
Research Areas
Corporate, Finance and Securities Law
Publication
Journal of Corporate Law Studies
Volume
18
Issue
1
First Page
185
Last Page
216
ISSN
1473-5970
Identifier
10.1080/14735970.2017.1316554
Publisher
Taylor & Francis (Routledge): SSH Titles - no Open Select
Citation
CHEN, Christopher C. H.; ZHANG, Wei; and WAN, Wai Yee.
Regulating squeeze-out techniques by controlling shareholders: The divergence between Hong Kong and Singapore. (2018). Journal of Corporate Law Studies. 18, (1), 185-216.
Available at: https://ink.library.smu.edu.sg/sol_research/2229
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1080/14735970.2017.1316554