Should Shareholders Have a Say on Acquisitions?

Abstract

Shareholders of U.S. corporations have lost billions of dollars in acquisitions they never approved. In the United Kingdom, the listing rules give shareholders a binding say when targets are large relative to their acquirers.A transatlantic comparison of M&A activity suggests that if U.S. shareholders had a say on acquisitions, U.S. acquirers would do fewer value‐destroying acquisitions and their own shareholders would experience smaller losses. The authors also report finding a significant difference in the performance of the large U.K. deals that are subject to a mandatory vote and those that are not. The United States has given shareholders a mandatory say on pay. Is it time for U.S. shareholders to have a binding say on corporate acquisitions?