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Shareholder Litigation In Mergers And Acquisitions, Randall S. Thomas, C. N.V. Krishnan, Ronald W. Masulis

Vanderbilt Law School Faculty Publications

Using hand-collected data, we examine the targeting of shareholder class action lawsuits in merger & acquisition (M & A) transactions, and the associations of these lawsuits with offer completion rates and takeover premia. We find that M & A offers subject to shareholder lawsuits are completed at a significantly lower rate than offers not subject to litigation, after controlling for selection bias, different judicial standards, major offer characteristics, M & A financial and legal advisor reputations as well as industry and year fixed effects. M & A offers subject to shareholder lawsuits have significantly higher takeover premia in completed deals, …