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dc.contributor.authorSubramanian, Guhan
dc.date.accessioned2013-12-05T17:41:27Z
dc.date.issued2005
dc.identifier.citationGuhan Subramanian, Fixing Freeze-outs, 115 Yale L.J. 2 (2005).en_US
dc.identifier.issn0044-0094en_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:11352715
dc.description.abstractFreezeout transactions, in which a controlling shareholder buys out the minority shareholders, have occurred more frequently since the stock market downturn of 2000 and the Sarbanes-Oxley Act of 2002. While freezeouts were historically executed as statutory mergers, recent Delaware case law facilitates a new mechanism--freezeout via tender offer--by eliminating entire fairness review for these transactions. This Article identifies two social welfare costs of the current doctrinal regime. First, the tender-offer-freezeout mechanism facilitates some inefficient (value-destroying) transactions by allowing the controller to exploit asymmetric information against the minority. Second, the merger-freezeout mechanism deters some efficient (value-increasing) transactions because of the special committee's veto power against the deal. These negative wealth effects are unlikely to be resolved through private contracting between the controller and the minority in the corporate charter. Rather than advocating patchwork reforms to correct these problems, this Article proposes a return to first principles of corporate law in the freezeout context. The result of this re-grounding would be a convergence in judicial standards of review for freezeouts and the elimination of the efficiency loss that is inherent in the existing doctrine.en_US
dc.language.isoen_USen_US
dc.publisherYale Law Schoolen_US
dc.relation.isversionofhttp://www.yalelawjournal.org/pdf/115-1/Subramanian.pdfen_US
dc.relation.hasversionhttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=634268en_US
dc.relation.hasversionhttp://www.law.harvard.edu/programs/olin_center/papers/pdf/Subramanian_501.pdfen_US
dash.licenseMETA_ONLY
dc.titleFixing Freeze-outsen_US
dc.typeJournal Articleen_US
dc.description.versionVersion of Recorden_US
dc.relation.journalYale Law Journalen_US
dash.depositing.authorSubramanian, Guhan
dash.embargo.until10000-01-01
dash.contributor.affiliatedSubramanian, Guhan


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