The Market for Corporate Control with Influential- and Dependent-Stakeholder Protection

This paper investigates how the level of stakeholder protection affects the market for corporate control. Two types of stakeholder protection are distinguished: the influential stakeholders' claims apply to the part of the firm's revenues that is not diverted by the manager as private benefits; the dependent stakeholders obtain a fraction of the firm's revenues once the private benefits have been realized. Stakeholder protection is not irrelevant for the market for corporate control, and its effects on the price paid by the bidder, the success or failure of takeovers, and their frequency depend crucially on the types of stakeholder protection. (JEL: G34)