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The Disciplinary Role of Takeovers

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Author Info
Scharfstein, David

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Abstract

This paper presents a theory of the disciplinary role of takeovers based on an explicit model of managerial incentive problems stemming from a symmetric information. It is argued that an informed raider can reduc e incentive problems by making managerial compensation more sensitive to information unavailable to shareholders. The paper also highlight s the importance of specifying the source of contractual inefficienci es when analyzing the effect of takeovers on incentives. Copyright 1988 by The Review of Economic Studies Limited.

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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Economic Studies.

Volume (Year): 55 (1988)
Issue (Month): 2 (April)
Pages: 185-99
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Handle: RePEc:bla:restud:v:55:y:1988:i:2:p:185-99

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