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The Evolution of the Market for Corporate Control

Author

Listed:
  • Voss, Paul

    (HEC Paris - Finance Department)

  • Lee, Samuel

    (Santa Clara University - Leavey School of Business; European Corporate Governance Institute (ECGI); Swedish House of Finance)

  • Burkart, Mike

    (Swedish House of Finance; London School of Economics and Political Science, Department of Finance; Finance Theory Group (FTG); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI))

Abstract

We consider an informed large shareholder who can choose between making a takeover bid herself and initiating a sale to another acquirer. Such takeover activism complements direct takeovers because the very choice mitigates the asymmetric information problem, thereby improving efficiency. As more investors enter the market for corporate control, takeover activism increasingly replaces direct takeovers as the prevailing mode of disciplinary control change---matching the evolution in practice. Our model shows how such an evolution, characterized by a symbiotic relationship between investor activism and private equity, arises to overcome asymmetric information and collective action problems through intermediated transactions

Suggested Citation

  • Voss, Paul & Lee, Samuel & Burkart, Mike, 2024. "The Evolution of the Market for Corporate Control," HEC Research Papers Series 1606, HEC Paris, revised 29 Dec 2025.
    • Handle: RePEc:ebg:heccah:1606
    DOI: 10.2139/ssrn.4709037
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    Keywords

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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