Anchoring in Takeovers Under Mandatory Bid Rule: Evidence From an Emerging Market

ABSTRACT This article documents the existence of an anchoring bias in the pricing and acceptance of takeover bids in a blockholder regime where the mandatory bid rule applies. Our analysis, performed on the Romanian market for corporate control, shows that the 52‐week high price of the target and the pricing of direct privatisations conducted by the government are strong predictors of both bid premium and outcome. The tender decision depends also on the scope of expropriation perceived by minority shareholders. Our results suggest that stronger capital market discipline is also important for insuring an effective protection of minority shareholders.