A law and finance theory of strategic blocking and preemptive bidding in takeovers

Peter Högfeldt*, Kenneth Högholm

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

7 Citations (Scopus)


This paper uses a law and finance approach to develop a new takeover theory that formalizes the idea that large target shareholders, who can block a takeover attempt, exercise a strategic influence on tender offer prices, and thereby, on the distribution of the takeover gain. The theory captures the interaction between legal rules, target ownership structure, bidder toehold and potential effects of arbitrageurs in an endogenously determined bargaining parameter that predicts a skewed distribution of the gain in favor of target shareholders. In a regression model, the parameter has significant explanatory power, specifically when the total takeover gain is positive.
Original languageEnglish
Peer-reviewed scientific journalJournal of Corporate Finance
Issue number4
Pages (from-to)403-425
Publication statusPublished - 2000
MoE publication typeA1 Journal article - refereed


  • 512 Business and Management
  • Law and finance
  • Takeover gains
  • Corporate control
  • Strategic blocking
  • Arbitrageurs


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