Mergers and acquisitions (M&As) represent an important means of corporate restructuring. Companies are keen to participate in M&As because by combining their assets with those of another firm they can achieve operating and financial synergies such as realizing economies of scale and scope, increased market power, increased utilization of the management team, cheaper access to capital, and a greater internal capital market. Some consider M&As as an important corporate governance mechanism. Jensen (1988) defines this activity as the market for corporate control where management teams compete for the right to manage the assets owned by shareholders. The team offering the highest value to the shareholders acquires the right to manage the assets until another management team that is able to realize a higher value of the assets replaces the existing management. The high incidence and volume of M&As highlights their significance to the corporate world (Martynova and Renneboog, 2008).
Given the high incidence of M&As and the large sums of money involved, regulatory attention focuses on this field. The regulators have several objectives to pursue. The first objective of regulatory intervention is to facilitate efficient corporate restructuring. More value-creating takeovers can be encouraged ...