In mergers and acquisitions transactions, a buyer and a seller will often agree to contractual mechanisms (deal protection devices) to deter third parties from jumping the deal and to compensate a disappointed buyer. This paper analyzes various deal protection devices, with a focus on two most...

The doctrine of successor liability transfers tort liability arising from the seller's past conduct from the seller to the buyer. If the buyer has as much information about the liability as the seller, all beneficial acquisitions take place and the seller takes the efficient level of precaution....

This amicus brief, filed with the Delaware Supreme Court in Verition Partners v. Aruba Networks, addresses two topics: (i) application of the efficient market hypothesis in appraisal litigation and (ii) empirical scholarship regarding the effect of Delaware appraisal decisions and amendments to...

This paper develops an auction design framework to analyze various methods for assessing “fair value” in post-merger appraisal proceedings. Our inquiry spotlights an approach recently embraced by some courts benchmarking fair value against the merger price itself. We show that merger price...

Corporate ownership structure with a controlling shareholder is widespread around the world. Conventional accounts of concentrated ownership warn against controlling shareholders' abusive exercise of control and extraction of “private benefits” at the expense of minority shareholders. These...

This paper examines how post-closing contingent payment (PCP) mechanisms, such as earnouts and purchase price adjustments, can facilitate mergers and acquisitions transactions. The paper examines two informational environments: in the first, the seller has superior information about the value of...

The paper reconsiders an old question in law and economics: will firms prefer to rely on legal sanctions or market sanctions as a means of committing to provide high quality goods? In the model, legal sanctions are expensive to deploy because of litigation costs, whereas market sanctions are...

We demonstrate how a golden parachute can be used to improve the target shareholders' net return by partially shifting the managerial compensation burden to the buyer through a higher acquisition price. Consistent with the empirical observations, we show that (1) the golden parachute will be...

An entrepreneur can organize either a for-profit or a non-profit firm to sell product or service to consumers in the long run. Because quality is non-verifiable and unobservable investment can still produce low quality, in equilibrium, consumers impose relational sanctions when low quality is...