Abstract
Using unique, hand-collected data, we study the interaction between the legal system and the takeover auction process from 1981 to 2015. We show a structural break in the takeover process in 1989. The strengthening of the property rights of target boards after Time Inc. decision has moved the auction process from public to a behind the scenes process where target boards control both the number of bidders and the flow of information. Target boards are more likely to initiate the auction themselves and the length of the private negotiation process has significantly lengthened. This fundamental change has benefited target shareholders.
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