Merger proposals, managerial discretion, and magnitude of shareholders' wealth gains

Abstract

Recently, the market for corporate control has attracted much attention. Scholars have attempted to ascertain whether managerial resistance is in the interests of shareholders. This study compares the average actual changes in wealth of accepted merger proposals with those of rejected merger proposals. It also compares the realized changes in shareholder wealth of the rejected proposals with the realizable shareholder wealth changes. In either case, managerial resistance leads to smaller gains in wealth. Based on these results, we cannot reject the view that managerial resistance is detrimental to the interests of shareholders.