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Journal articles

Sentencing private benefits in a takeover contest

Abstract : We present a model of profit diversion into a takeover environment. The model incorporates a legal environment characterized by a probability of being convicted, a monetary sanction (ex-ante protection) and the costs of administrating the takeover (ex-post protection). We show that the extraction of private benefits is reduced by the existence of such a legal environment, which is consistent with a number of empirical studies. It also predicts that legal environment can conduct the bidder to acquire more than 50% of the share due to the impact of the final holding of the bidder on the fine. The paper contributes to the current debate on regulation of white-collar crime. It highlights the trade-off between the ex-post profit diversion and minority protection, and the ex-ante probability of efficient takeovers. But, considering simultaneously two tools of protection, the ex-ante and the ex-post ones, which do not have the same impact, we derive some guidelines in order to analyze the current trend of the US and the EU laws.
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Journal articles
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Contributor : Christian At Connect in order to contact the contributor
Submitted on : Thursday, April 28, 2016 - 6:30:31 PM
Last modification on : Thursday, January 13, 2022 - 11:58:21 AM


  • HAL Id : halshs-01309085, version 1



Christian At, Nathalie Chappe, Pierre-Henri Morand. Sentencing private benefits in a takeover contest. International Review of Law and Economics, Elsevier, 2004, 24 (4), pp.409-424. ⟨halshs-01309085⟩



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