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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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  • Deakin, Simon
  • Singh, Ajit

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.

Suggested Citation

  • Deakin, Simon & Singh, Ajit, 2008. "The stock market, the market for corporate control and the theory of the firm: legal and economic perspectives and implications for public policy," MPRA Paper 53792, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:53792
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    References listed on IDEAS

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    Cited by:

    1. Singh, Ajit & Sheng, Andrew, 2011. "Islamic finance revisited: conceptual and analytical issues from the perspective of conventional economics," MPRA Paper 39007, University Library of Munich, Germany, revised 10 Apr 2012.
    2. Prabirjit Sarkar & Ajit Singh, 2010. "Law, finance and development: further analyses of longitudinal data," Cambridge Journal of Economics, Oxford University Press, vol. 34(2), pages 325-346, March.
    3. Konzelmann, S. & Fovargue-Davies, M., 2011. "Anglo-Saxon Capitalism in Crisis? Models of Liberal Capitalism and the Preconditions for Financial Stability," Working Papers wp422, Centre for Business Research, University of Cambridge.
    4. Sheng, Andrew & Singh, Ajit, 2012. "The Challenge of Islamic Finance," MPRA Paper 53044, University Library of Munich, Germany.
    5. John Armour & Simon Deakin & Prabirjit Sarkar & Mathias Siems & Ajit Singh, 2009. "Shareholder Protection and Stock Market Development: An Empirical Test of the Legal Origins Hypothesis," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 6(2), pages 343-380, June.
    6. Wald Nowotny, 2013. "The Economics of Financial Regulation," Chapters, in: Andreas Dombret & Otto Lucius (ed.), Stability of the Financial System, chapter 15, Edward Elgar Publishing.
    7. 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.
    8. Sue Konzelmann & Frank Wilkinson & Marc Fovargue-Davies & Duncan Sankey, 2009. "Governance, Regulation and Financial Market Instability: The Implciations for Policy," Working Papers wp392, Centre for Business Research, University of Cambridge.
    9. 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.

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    More about this item

    Keywords

    stock market; company law reform; economic development; institutional arrangement; developing and transition systems;
    All these keywords.

    JEL classification:

    • D0 - Microeconomics - - General
    • F0 - International Economics - - General
    • G1 - Financial Economics - - General Financial Markets
    • K0 - Law and Economics - - General
    • K2 - Law and Economics - - Regulation and Business Law

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