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Article: The value of fiduciary duties: Evidence from en bloc sales in Singapore

TitleThe value of fiduciary duties: Evidence from en bloc sales in Singapore
Authors
KeywordsAcquisitions
Agency problem
Collective sale committee
En bloc sales
Fiduciary duties
Mergers
Issue Date2022
Citation
International Review of Law and Economics, 2022, v. 72, article no. 106093 How to Cite?
AbstractThis paper examines the impact of fiduciary duties on collective asset sales in the case of owners acting as delegates for other owners, thereby potentially inducing conflicts of interests. Our identification strategy exploits a unique legal shock in Singapore, which established fiduciary duties in those transactions in the real estate market known colloquially as en bloc sales. The imposition of fiduciary duties caused the price premium of units sold via en bloc sales to increase over units ineligible for en bloc sale, as well as over units that, although eligible for en bloc sale, are sold individually. In addition, this valuation effect is stronger for projects with especially severe agency problems as proxied by high ownership turnover. This legal reform also affects the general private housing market beyond the en bloc premium: findings show that residential owners are increasingly willing to participate and reduce condominium turnover. Finally, we find that the stock price of public real estate developers responded positively to the legal reform, which indicates a possible overall positive welfare effect. Our study highlights the importance of judicial oversight for addressing agency conflicts in non-consensual asset-sale mechanisms.
Persistent Identifierhttp://hdl.handle.net/10722/345271
ISSN
2023 Impact Factor: 0.9
2023 SCImago Journal Rankings: 0.491

 

DC FieldValueLanguage
dc.contributor.authorHu, Jianfeng-
dc.contributor.authorLow, Kelvin F.K.-
dc.contributor.authorZhang, Wei-
dc.date.accessioned2024-08-15T09:26:18Z-
dc.date.available2024-08-15T09:26:18Z-
dc.date.issued2022-
dc.identifier.citationInternational Review of Law and Economics, 2022, v. 72, article no. 106093-
dc.identifier.issn0144-8188-
dc.identifier.urihttp://hdl.handle.net/10722/345271-
dc.description.abstractThis paper examines the impact of fiduciary duties on collective asset sales in the case of owners acting as delegates for other owners, thereby potentially inducing conflicts of interests. Our identification strategy exploits a unique legal shock in Singapore, which established fiduciary duties in those transactions in the real estate market known colloquially as en bloc sales. The imposition of fiduciary duties caused the price premium of units sold via en bloc sales to increase over units ineligible for en bloc sale, as well as over units that, although eligible for en bloc sale, are sold individually. In addition, this valuation effect is stronger for projects with especially severe agency problems as proxied by high ownership turnover. This legal reform also affects the general private housing market beyond the en bloc premium: findings show that residential owners are increasingly willing to participate and reduce condominium turnover. Finally, we find that the stock price of public real estate developers responded positively to the legal reform, which indicates a possible overall positive welfare effect. Our study highlights the importance of judicial oversight for addressing agency conflicts in non-consensual asset-sale mechanisms.-
dc.languageeng-
dc.relation.ispartofInternational Review of Law and Economics-
dc.subjectAcquisitions-
dc.subjectAgency problem-
dc.subjectCollective sale committee-
dc.subjectEn bloc sales-
dc.subjectFiduciary duties-
dc.subjectMergers-
dc.titleThe value of fiduciary duties: Evidence from en bloc sales in Singapore-
dc.typeArticle-
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/j.irle.2022.106093-
dc.identifier.scopuseid_2-s2.0-85137011044-
dc.identifier.volume72-
dc.identifier.spagearticle no. 106093-
dc.identifier.epagearticle no. 106093-

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