Cheap-Stock Tunneling Around Pre-emptive Rights
ACLE Law & Finance Seminar with Jesse M. Fried (Harvard Law School). Title: "Cheap-Stock Tunneling Around Pre-emptive Rights". The seminar is jointly organized with Finance Group. Venue: Amsterdam Business School.
Date | 21 April 2016 |
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Time | 13:00 -14:30 |
Location | Roeterseilandcampus - gebouw M |
Room | Amsterdam Business School - REC M - Room M3.02 |
Corporate law has long relied on pre-emptive rights to prevent a controlling shareholder from economically diluting minority shareholders by selling itself cheap stock. I show that that pre-emptive rights, while making cheap-stock tunneling more difficult, fail to fully protect minority shareholders in most-real world settings. My analysis suggests the potential need for supplemental mechanisms, such as judicial review of equity issuances, to provide adequate protection to minority shareholders.