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The Stock Market, the Market for Corporate Control and the Theory of the Firm: Legal and Economic Perspectives and Implications for Public Policy

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  • Simon deakin
  • Ajit Singh

Abstract

It is argued here that - contrary to current conventional wisdom - an active market for corporate control is not an essential ingredient of either company law reform or financial and economic development. The absence of such a market in coordinated market systems during their modern economic development was not an evolutionary deficit, but an effective and positive institutional arrangement. The economic and social costs associated with restructuring driven by hostile takeover bids, which are increasingly seen as prohibitive in the liberal market economies, would most likely harm the prospects for growth in developing and transition systems.

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Bibliographic Info

Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp365.

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Date of creation: Jun 2008
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Handle: RePEc:cbr:cbrwps:wp365

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Web page: http://www.cbr.cam.ac.uk/

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Keywords: takeovers; market for corporate control; varieties of capitalism;

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References

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  1. Antoine Rebérioux, 2007. "Does shareholder primacy lead to a decline in managerial accountability?," Cambridge Journal of Economics, Oxford University Press, vol. 31(4), pages 507-524, July.
  2. John Parkinson, 2003. "Models of the Company and the Employment Relationship," British Journal of Industrial Relations, London School of Economics, vol. 41(3), pages 481-509, 09.
  3. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," American Economic Review, American Economic Association, vol. 91(1), pages 1-32, March.
  4. Ajit Singh & Bruce Weisse & Alaka Singh, 2002. "Corporate governance, competition, the new international financial architecture and large corporations in emerging markets," ESRC Centre for Business Research - Working Papers wp250, ESRC Centre for Business Research.
  5. Singh, Ajit, 1998. "Should Africa Promote Stock Market Capitalism?," MPRA Paper 51846, University Library of Munich, Germany.
  6. Singh, Ajit, 1998. "Liberalisation, the stock market and the market for corporate control: a bridge too far for the Indian economy?," MPRA Paper 54929, University Library of Munich, Germany.
  7. Singh, A., 1991. "Corporate Takeovers: A Review," Cambridge Working Papers in Economics 9206, Faculty of Economics, University of Cambridge.
  8. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March.
  9. Henry Hansmann & Reinier Kraakman, 2000. "The End Of History For Corporate Law," Yale School of Management Working Papers ysm136, Yale School of Management, revised 01 Feb 2001.
  10. Dale W. Jorgenson, 2001. "Information Technology and the U. S. Economy," Harvard Institute of Economic Research Working Papers 1911, Harvard - Institute of Economic Research.
  11. John Buchanan & Simon Deakin, 2007. "Japan's Paradoxical Response to the new 'Global Standard' in Corporate Governance," ESRC Centre for Business Research - Working Papers wp351, ESRC Centre for Business Research.
  12. Ajit Singh, 2008. "Stock Markets in Low and Middle Income Countries," ESRC Centre for Business Research - Working Papers wp377, ESRC Centre for Business Research.
  13. Yarrow, George K, 1985. "Shareholder Protection, Compulsory Acquisition and the Efficiency of the Takeover Process," Journal of Industrial Economics, Wiley Blackwell, vol. 34(1), pages 3-16, September.
  14. Gunther Tichy, 2001. "What Do We Know about Success and Failure of Mergers?," Journal of Industry, Competition and Trade, Springer, vol. 1(4), pages 347-394, December.
  15. Simon Deakin, 2007. "Reflexive Governance and European Company Law," ESRC Centre for Business Research - Working Papers wp346, ESRC Centre for Business Research.
  16. Mathias Siems, 2007. "Shareholder Protection around the World ("Leximetric II")," ESRC Centre for Business Research - Working Papers wp359, ESRC Centre for Business Research.
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Cited by:
  1. Sarkar, Prabirjit & Singh, Ajit, 2009. "Law, Finance and Development: Further Analyses of Longitudinal Data," MPRA Paper 39060, University Library of Munich, Germany.
  2. sarkar, prabirjit, 2011. "Common Law vs. Civil Law: Which System Provides More Protection to Shareholders and Creditors and Promotes Financial Development," MPRA Paper 32930, University Library of Munich, Germany.
  3. Igor Filatotchev & Gregory Jackson & Chizu Nakajima, 2013. "Corporate governance and national institutions: A review and emerging research agenda," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 965-986, December.
  4. Sheng, Andrew & Singh, Ajit, 2012. "The Challenge of Islamic Finance," MPRA Paper 53044, University Library of Munich, Germany.

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