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ECGI RESEARCH
23 July 2014  

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See the latest research from the ECGI published in the ECGI Finance Working Paper series
Mon, 14 Jul 2014 10:15 GMT  
ECGI Finance Working Paper 431/2014

by
Mike Burkart, Stockholm School of Economics and ECGI Samuel Lee, New York University and ECGI

Submitted by
Mike Burkart
Keywords:
Tender Offers, Investor Activism, Signalling, Free-Rider Problem, Means of Payment, Unbundling Ownership and Control, Empty Voting

This paper analyses how outsiders, such as bidders or activist investors, overcome the lack of coordination and information among dispersed shareholders. We identify the two basic means to achieve this goal. First, the outsider must relinquish private benefits in a manner that is informative about security benefits. We show under which conditions this is feasible and which acquisition strategies used in practice meet these conditions. Second, the outsider can alternatively use derivatives to drive a wedge between her voting power and her economic interest in the firm. Such separation of ownership and control, while typically considered a source of corporate governance problems, is an efficient response to the frictions dispersed ownership causes for control contestability.


to view details and download this Working Paper from the SSRN website

All ECGI Working Papers in the Law and Finance series are available on the ECGI website at www.ecgi.org/wp
See the latest research from the ECGI published in the ECGI Law Working Paper series
Fri, 20 Jun 2014 11:01 GMT  
ECGI Law Working Paper 259/2014

by
Guido Ferrarini, University of Genoa and ECGI Paolo Saguato, NYU School of Law

Submitted by
Guido Ferrarini
Keywords:
financial markets, financial market infrastructure, exchange, clearing house, central securities depository, systemic risk, transaction cost, securities market, derivatives market, MiFID II, EMIR, MiFIR, Dodd-Frank Act

This paper focuses on the impact of financial market infrastructures (FMIs) and of their regulation on the post-crisis transformation of securities and derivatives markets. It examines, in particular, the role that trading and post-trading FMIs, and their new regulatory regime, are playing in the expansion of ‘public’ securities and derivatives markets, and the progressive shrinkage of ‘private’ markets (which broadly coincide with the ‘unregulated’ or ‘less regulated’ over-the-counter (OTC) markets). The paper provides an overview of the policy approaches underlying the international crisis-era reforms to FMIs, and focuses on the dichotomy between the ‘systemic risk’ and ‘transaction costs’ approaches to financial markets and FMIs regulation. By reviewing the current move from ‘private’ markets to ‘public’ markets internationally, and with respect to the EU and US regimes, we analyze the role of trading infrastructures as liquidity providers, both in the securities markets and in the derivatives markets. And, shifting the focus to post-trading infrastructures – central clearing houses (CCPs), central securities depositories (CSDs), and trade repositories (TRs) – we address their role in supporting financial stability and market transparency. We conclude by identifying how regulators are now more deeply involved in FMIs’ governance and operation. We argue that such policy approach resulted in regulatory initiatives which move in the direction of increasing the systemic scope of FMIs, introducing elements of publicity in private markets, and calling for higher public supervision.


to view details and download this Working Paper from the SSRN website

All ECGI Working Papers in the Law and Finance series are available on the ECGI website at www.ecgi.org/wp