Corp orate G overnance Solution s f or Transition Economies : Re presentations and Warr anties in Take over Ag re em ents ∗

摘要: The decline of stoc k markets in the transition economies must make phenomenon ownership concentration go hand with a more important due diligence and search for solutions preserving channel external financing. In absence concrete formal pro- cedures that pay back restructuring effort, majority owners decisively affect allocation companies' wealth detrimental small shareholders. When mandatory bid rule is effective, completing takeovers at high prices makes capital shrink, affecting on long term mere capitalist conception economic regime economies. Some new forms en- forcement mechanisms have to be proposed order mitigate classical corporate governance conflict between large minority Our approach aims investigate an option asking private law enforcement, which could encourage controlling shareholder disclose real status business being sold: representation warranties takeover agreements. this respect, we propose screening model, case cash—financing acquisition. pur- pose formalization determine features acquisition contract equilibrium, defined by amount cash offered control fraction liability assumed target two different contexts: (i) when buyer same information; (ii) information asymmetry arises parties. model provides some theoretical predictions concerning optimal cash, premium, overpayment target. It also contributes debate type legal changes relevant JEL classification: G32; G34; L14