Breaking up is hard to do? An analysis of termination fee provisions and merger outcomes

• 成果类型: Article
• 署名作者: Bates, TW; Lemmon, ML
• 署名单位: University of Delaware; Utah System of Higher Education; University of Utah
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(03)00120-X
• 发表日期: 2003
• 页码: 469-504
• 关键词: merger; acquisition; termination fee; breakup fee

摘要

We examine the provision of termination fee clauses in merger agreements between 1989 and 1998. Target-payable fees are observed more frequently when bidding is costly and the potential for information expropriation by third parties is significant. Fee provisions appear to benefit target shareholders through higher deal completion rates and greater negotiated takeover premiums. We conclude that target-payable fees serve as an efficient contracting device, rather than a means by which to deter competitive bidding. Bidder fee provisions appear to be used to secure target wealth gains in deals with higher costs associated with negotiation and bid failure. (C) 2003 Elsevier B.V. All rights reserved.