The market for corporate control, often referred to as the takeover market, is subject to scientific research since many years.
This paper starts with Manne‘s (1965) initial essay on the topic, introduce the theory of the market for corporate control. Therefore, it will begin with a definition of the terms “corporate control” and “the market for corporate control”. Following this, it will explain the possibilities of taking over the control of a corporation. Subsequently, it will argue why the market for corporate control is of great importance. Afterwards, a synopsis on the current empirical evidence of its efficiency follows. Finally, the author takes a look on the welfare effects of the market for corporate control, before concluding on its applicability and having a look on solutions to correct the imperfections of the model.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- The Market for Corporate Control – A definition
- Corporate Control
- The Market for Corporate Control
- Why are takeovers needed?
- The failure of internal controls
- Hostile takeovers as disciplining devices
- Taking over corporate control
- Three takeover devices for the acquirer
- Proxy Fight
- Direct Purchase
- Merger
- Summary
- Defense devices for the incumbents
- Three takeover devices for the acquirer
- Corporate Control takeover motives
- Managerial efficiency hypothesis / Creation of market power hypothesis
- Hubris hypothesis and the egoistic, overpaying manager
- The welfare effects of corporate takeovers
- Costs of a corporate takeover
- Discussion: Does the market for corporate control work?
- Solving problems of takeovers
- Conclusion
- References
- List of Tables
- List of Abbreviations
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper aims to introduce the theory of the market for corporate control, exploring its definition, mechanisms, and potential benefits. It examines the reasons for takeovers, the motives behind them, and the potential welfare effects. The paper also discusses the efficiency of the market for corporate control and potential solutions to address its imperfections.
- Definition and mechanisms of the market for corporate control
- Reasons for takeovers and their potential benefits
- Motives behind corporate control takeovers
- Welfare effects of the market for corporate control
- Efficiency and imperfections of the market for corporate control
Zusammenfassung der Kapitel (Chapter Summaries)
The paper begins by defining the term "corporate control" and its significance in the context of publicly listed corporations. It explores the separation of ownership and control, highlighting the need for mechanisms to ensure accountability of corporate directors to their investors. The paper then delves into the market for corporate control, explaining its basic proposition and how it facilitates the transfer of control over corporate assets from one party to another.
The paper further examines the reasons for takeovers, focusing on the failure of internal controls and the role of hostile takeovers as disciplining devices. It outlines various takeover devices for acquirers, including proxy fights, direct purchases, and mergers, as well as defense mechanisms employed by incumbents. The paper then explores the motives behind corporate control takeovers, examining the managerial efficiency hypothesis, the creation of market power hypothesis, and the hubris hypothesis.
The paper concludes by discussing the welfare effects of corporate takeovers, analyzing both the potential benefits and costs. It examines the efficiency of the market for corporate control and explores potential solutions to address its imperfections.
Schlüsselwörter (Keywords)
The key terms and focus themes of this paper include corporate control, market for corporate control, takeovers, mergers, acquisitions, managerial efficiency, hubris hypothesis, welfare effects, and corporate governance.
- Quote paper
- Marius Beckermann (Author), 2012, The Market for Corporate Control.The Theory and the Empirical Evidence, Munich, GRIN Verlag, https://www.grin.com/document/286522
-
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X. -
Upload your own papers! Earn money and win an iPhone X.