The target management gives an opinion to shareholders within 10 days of publication. The bidder’s disclosure must contain all material information related to the offer, including interest of the bidder in the target; the bidder identity and ownership; future plans regarding the target company; past contracts, transactions and agreements between acquirer and target; the estimated consequences to the bidder's shareholders; and the source and amount of funds involved. The latter three items of information, together with the requirement for target board opinion, lead us to code the US disclosure variable as 1. The information should be available to target shareholders within 3 days of the announcement of the tender offer, at the bidder’s expense.<sup>58</sup>

|If an acquirer tenders publicly for the shares,|Fair price for non-tendering investors|1|
|---|---|---|
|he must offer the same terms to any wiling|Appraisal rights after a merger|1|
|shareholders within 20 days of the end of|Sell-out provisions|1|
|<br>the offer (coded as 1).<sup>59</sup>All state laws|||

provide appraisal rights to shareholders after a merger, giving them the option to dissent and sell their shares at a fair market price (coded as 1). Sell-out provisions mandate the provision of detailed information from the company addressing whether the filing persons believe the transaction is fair to unaffiliated security holders and why (coded as 1).<sup>60</sup> On anti-takeover provisions, the US Anti-takeover tactics 0.71 averages 71% out of 100 (the average is computed on 1, 1, 0, 0, 1, 1, 1, as follows). Share issues and asset sales are not forbidden during a tender offer, but do require shareholder approval (each coded as 1), voting caps and golden shares are allowed (each coded as 0), shares are freely transferable (coded as 1), shareholders agreements are not frequently used among listed companies (coded as 1), listed companies are mostly one-vote-one-share, and pyramids and cross-shareholdings are not frequent (coded as 1). The anti-takeover variable is particularly deficient at capturing the true extent of anti-takeover provision popularity in the US, since the tactics used in the country are fairly less typical (such as poison pills, which are endorsed in 25 US states, and staggered boards, both a virtually unknown phenomenon in emerging markets) across the sample of less developed capital markets.<sup>61</sup> In the majority of the countries around the world, however, anti-takeover tactics are still as simple as maintaining concentrated ownership or using voting caps and transferability restrictions. Keeping in mind the bias (which leads us to exclude the US from regressions as a robustness check), we nevertheless have chosen this methodology since the alternative would understate the extent of anti-takeover defenses in a significant part of the sample countries.

The overall takeovers index is obtained by a simple <u>average of the above 12 characteristics,</u> rendering a value of 0.76. **Takeover index**

|**Takeover index**<br>**0.76**|
|---|

# **5. Data and Empirical results**

The takeover laws questionnaire (see Appendix D) was constructed in cooperation with experts in takeover issues in nine pilot countries, Bulgaria, Chile, France, Germany, Japan, 17