- This event has passed.
Does the Control鈥揅ash Flow Rights Wedge Capture Private Benefits of Control? Evidence from a Mandatory Bid Rule Reform
Part of the Lubar Research Seminar Series
厂辫别补办别谤:听 Carlos Acuna, Lubar College of Business, University of Wisconsin – Milwaukee
Carlos examines whether the control鈥揷ash flow rights wedge captures private benefits of control (PBC) by exploiting Chile鈥檚 adoption of the Mandatory Bid Rule (MBR), which requires equal-price offers to all shareholders in control transactions. Firms could opt out for three years through early notification, with opting out reflecting higher PBC. He finds an inverted U-shaped relationship between opting out and the wedge, consistent with outsider monitoring limiting expropriation beyond the turning point. The inverted-U implies that the wedge is an imperfect proxy for PBC, calling for measures that capture both insider expropriation incentives and outsider monitoring intensity.