IDEAS home Printed from https://ideas.repec.org/p/cbr/cbrwps/wp254.html
   My bibliography  Save this paper

Implicit contracts, takeovers and corporate governance: in the shadow of the city code

Author

Listed:
  • Simon Deakin
  • Richard Hobbs
  • David Nash
  • Giles Slinger

Abstract

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.

Suggested Citation

  • Simon Deakin & Richard Hobbs & David Nash & Giles Slinger, 2002. "Implicit contracts, takeovers and corporate governance: in the shadow of the city code," Working Papers wp254, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp254 Note: PRO-2
    as

    Download full text from publisher

    File URL: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp254.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. 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.
    2. Alan J. Auerbach, 1988. "Corporate Takeovers: Causes and Consequences," NBER Books, National Bureau of Economic Research, Inc, number auer88-1, January.
    3. 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.
    4. Luigi Zingales, 1997. "Corporate Governance," NBER Working Papers 6309, National Bureau of Economic Research, Inc.
    5. 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)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Simon Deakin, 2013. "The Legal Framework Governing Business Firms & its Implications for Manufacturing Scale & Performance: The UK Experience in International Perspective," Working Papers wp449, Centre for Business Research, University of Cambridge.
    2. Hilary Bates & Nick Oliver & Matthias Holweg & Michael Lewis, 2004. "Motor vehicle recalls: trends, patterns and emerging issues," Working Papers wp295, Centre for Business Research, University of Cambridge.
    3. Christel Lane, 2003. "Changes in corporate governance of German corporations: convergence to the Anglo-American model?," Working Papers wp259, Centre for Business Research, University of Cambridge.

    More about this item

    Keywords

    hostile takeovers; stakeholding; implicit contracts; breach of trust;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbr:cbrwps:wp254. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ruth Newman and Georgie Cohen). General contact details of provider: http://www.cbr.cam.ac.uk .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.