Intragroup M&A, minority shareholders' protection, and legal origin

This paper analyzes how legal-origin families affect minority shareholders¿ returns in intragroup mergers and acquisitions (M&As). I collected data for 1,208 intragroup M&As from 60 countries to determine whether legal origin explains the treatment reserved to minority shareholders by the bidder. I find that intragroup acquisitions actually create value, but target shareholders across the world do not benefit from intragroup transactions in the same way. In fact, target shareholders in common law countries earn returns abnormally higher than those realized by target shareholders in civil law countries. Thus, while all legal families seem to provide at least a minimum level of investor protection in case of intragroup M&A, common law gives more power to minority investors when dealing with controlling shareholders