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When and Why Do Takeovers Lead to Fraud?

Title
When and Why Do Takeovers Lead to Fraud?
Author
이은정
Issue Date
2018-03
Publisher
Wiley-Blackwell
Citation
Financial Management, v. 48, No. 1, Page. 45-76
Abstract
This paper develops a model explaining how acquisitions of controlling block ownership can facilitate post‐takeover fraud by new managers when investor protection is poor. Based on disclosures of embezzlement or breach of fiduciary duty in Korean firms, we find that the probability of explicit looting in takeover targets is 13%, almost five times as large as a matched sample of non‐targets. Post‐takeover frauds are primarily driven by transfers of minority blocks, while the corresponding probability in majority acquisitions is statistically indistinguishable from the non‐targets. These findings may explain why minority acquisitions of controlling blocks are popular under poor investor protection.
URI
https://onlinelibrary.wiley.com/doi/full/10.1111/fima.12213https://repository.hanyang.ac.kr/handle/20.500.11754/105421
ISSN
0046-3892
DOI
10.1111/fima.12213
Appears in Collections:
COLLEGE OF BUSINESS AND ECONOMICS[E](경상대학) > BUSINESS ADMINISTRATION(경영학부) > Articles
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