Law Commons^™

Transfers Of Control And The Quest For Efficiency: Can Delaware Law Encourage Efficient Transactions While Chilling Inefficient Ones?, John C. Coffee Jr.

Faculty Scholarship

At first glance, few corporate law principles seem to be better established than the widely prevailing rule that a controlling shareholder may receive a control premium for its shares. From a comparative law perspective, however, this consensus may seem surprising, because the United States stands virtually alone in failing to accord minority shareholders any presumptive right to share in a control premium. Yet, from an economic perspective, the permissive U.S. rule is not surprising because economists generally agree that economic efficiency is promoted by privately negotiated control transfers at premiums not offered to minority shareholders.

The puzzling fact that this …