Title: Governance By Exit: An Analysis Of The Market For Corporate Control
Abstract: Abstract The market for corporate control is frequently advocated as an important mechanism of governance in public companies. Takeovers may contribute to governance in a number of ways. The threat of takeover provides an incentive for managers to administer the company in the interests of shareholders. The occurrence of a takeover provides an opportunity for a potential acquiror to scrutinize the performance of the incumbent management team, and replace them if appropriate. In addition, the takeover market may function as an external governance of last resort, utilized only when internal control mechanisms have failed. However, the disciplinary effects of the takeover market may be circumvented when target managers adopt defence tactics to thwart an unwanted bid. Moreover, the available empirical evidence concerning takeover gains is unclear, and at the very least only provides equivocal support for the governance role of corporate takeovers.
Publication Year: 1997
Publication Date: 1997-07-10
Language: en
Type: book-chapter
Indexed In: ['crossref']
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Cited By Count: 6
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