Implicit contracts, takeovers and corporate governance: in the shadow of the city code
This paper offers a qualitative, case-study based analysis of hostile takeover bids mounted in the UK in the mid-1990s under the regime of the City Code on Takeovers and Mergers. It is shown that during bids, directors of bid targets focus on the concerns of target shareholders to the exclusion of other stakeholder groups. A review of the case studies five years on find that, almost withouth exception, mergers led to large-scale job losses and asset disposals. However, almost none of the bids were considered by financial commentators, at this point, to have generated shareholder value for investors in that merged company. While there is therefore clear evidence that the Takeover Code is effective in protecting the interests of target shareholders, the implications of the Code for efficiency in corporate performance are much less certain.
References listed on IDEAS
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- Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
- Alan J. Auerbach, 1988. "Corporate Takeovers: Causes and Consequences," NBER Books, National Bureau of Economic Research, Inc, number auer88-1, 01.
- Andrei Shleifer & Lawrence H. Summers, 1988.
"Breach of Trust in Hostile Takeovers,"
NBER Chapters,in: Corporate Takeovers: Causes and Consequences, pages 33-68
National Bureau of Economic Research, Inc.
- Andrei Shleifer & Lawrence H. Summers, 1987. "Breach of Trust in Hostile Takeovers," NBER Working Papers 2342, National Bureau of Economic Research, Inc.
- Luigi Zingales, 1997. "Corporate Governance," NBER Working Papers 6309, National Bureau of Economic Research, Inc.
- Zingales, Luigi, 1998. "Corporate Governance," CEPR Discussion Papers 1806, C.E.P.R. Discussion Papers.
- Simon Deakin & Alan Hughes, 1999. "Economic Efficiency and the Proceduralisation of Company Law," Working Papers wp133, Centre for Business Research, University of Cambridge. Full references (including those not matched with items on IDEAS)
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