Do Appraisal Challenges Benefit Target Shareholders through Narrowing Arbitrage Spread?

The Journal of Law and Economics, Volume 63, Issue 4

Writing in The Journal of Law and Economics, Managing Principal Gaurav Jetley responds to a paper claiming that increased appraisal litigation in the Delaware Chancery Court results in lower post-announcement arbitrage spreads, to the benefit of target shareholders. In examining the previous authors’ data, however, Mr. Jetley finds no evidence of this claim. Instead, he demonstrates that the observed gap in arbitrage spread is driven entirely by outliers and sampling biases.

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Authors

Huang Y, Jetley G