Mergers & Acquisitions
May 1, 2015
The dark side of shareholder litigation
It turns out acquiring firms experience better stock reaction to deals in states with so-called universal demand laws. By Yongqiang Chu and Yijia Zhao
Between late 1980s and mid-2000s, 23 states passed the universal demand laws, which
created significant obstacles for corporate shareholders to initiate derivative litigation
against directors and executives of companies incorporated in states that adopted
these laws. We obtain and analyze more than a thousand U.S. public company M&A transactions
between 1980 and 2012...
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