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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

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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    1. 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.
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    6. David Alexander Clark (ed.), 2006. "The Elgar Companion to Development Studies," Books, Edward Elgar Publishing, number 3175, June.
    7. 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.
    8. Ajit Singh, 2008. "Stock Markets in Low and Middle Income Countries," Working Papers wp377, Centre for Business Research, University of Cambridge.
    9. John Buchanan & Simon Deakin, 2007. "Japan's Paradoxical Response to the new 'Global Standard' in Corporate Governance," Working Papers wp351, Centre for Business Research, University of Cambridge.
    10. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," American Economic Review, American Economic Association, vol. 91(1), pages 1-32, March.
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    15. Simon Deakin, 2007. "Reflexive Governance and European Company Law," Working Papers wp346, Centre for Business Research, University of Cambridge.
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    Citations

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    Cited by:

    1. 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.
    2. Sheng, Andrew & Singh, Ajit, 2012. "The Challenge of Islamic Finance," MPRA Paper 53044, University Library of Munich, Germany.
    3. Wald Nowotny, 2013. "The Economics of Financial Regulation," Chapters,in: Stability of the Financial System, chapter 15 Edward Elgar Publishing.
    4. 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.
    5. 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.

    More about this item

    Keywords

    stock market; company law reform; economic development; institutional arrangement; developing and transition systems;

    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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