Publication Type

Journal Article

Version

publishedVersion

Publication Date

6-2021

Abstract

This paper studies mandatory bids in China against an institutional backdrop of restrictive IPO requisites. We find that virtually no shares held by external shareholders are tendered in mandatory bids for all the remaining shares. Mandatory bidders’ tactics to avoid tendering by public investors include pressing down their bid prices, and the potential manipulation of target stock prices. In relation to the economic impacts of mandatory bids, we document that the market responds favourably to their announcements, and that targets’ operational performance improves in their wake, consistent with the theoretical prediction that mandatory bids induce efficient transfers of corporate control. Our research is among the earliest empirical works on the mandatory bid rule in a particular jurisdiction. It not only yields interesting results pertaining to the unique Chinese regulatory environment, but also generates useful insights into mandatory bids beyond China.

Keywords

Tender offer, Mandatory bids, Transfer of corporate control, Mergers and acquisitions, Initial public offering, Chinese securities law

Discipline

Banking and Finance Law | Business Organizations Law

Research Areas

Corporate, Finance and Securities Law

Areas of Excellence

Growth in Asia

Publication

European Business Organization Law Review

Volume

22

First Page

351

Last Page

394

ISSN

1566-7529

Identifier

10.1007/s40804-021-00210-6

Publisher

Springer

Comments

Cited by: 3

Additional URL

https://doi.org/10.1007/s40804-021-00210-6

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