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The market for corporate control: The scientific evidence (1983)
| Venue: | Journal of Financial Economics |
| Citations: | 613 - 11 self |
BibTeX
@ARTICLE{Jensen83themarket,
author = {Michael C. Jensen and Richard S. Ruback},
title = {The market for corporate control: The scientific evidence},
journal = {Journal of Financial Economics},
year = {1983},
pages = {5--50}
}
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Abstract
This paper reviews much of the scientific literature on the market for corporate control. The evidence indicates that corporate takeovers generate positive gains, that target firm shareholders benefit, and that bidding firm shareholders do not lose. The gains created by corporate takeovers do not appear to come from the creation of market power. With the exception of actions that exclude potential bidders, it is difficult to find managerial actions related to corporate control that harm shareholders. Finally, we argue the market for corporate control is best viewed as an arena in which managerial teams compete for the rights to manage corporate resources. 1. The analytical perspective 1.1. Definition Corporate control is frequently used to describe many phenomena ranging from the general forces that influence the use of corporate resources (such as legal and regulatory systems and competition in product and input markets) to the control of a majority of seats on a corporation’s board of directors. We define corporate control as the rights to determine the management of
Keyphrases
corporate control scientific evidence corporate resource corporate takeover managerial team analytical perspective market power input market managerial action definition corporate control harm shareholder potential bidder regulatory system general force scientific literature positive gain bidding firm shareholder target firm shareholder many phenomenon
