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The Divergence of U.S. and UK Takeover Regulation

10 Pages Posted: 2 Nov 2007 Last revised: 4 Sep 2008

John Armour

University of Oxford - Faculty of Law; University of Oxford - Said Business School; European Corporate Governance Institute (ECGI)

David A. Skeel Jr.

University of Pennsylvania Law School; European Corporate Governance Institute (ECGI)

Abstract

Hostile takeovers are commonly thought to play a key role in rendering managers accountable to dispersed shareholders. Yet, surprisingly little attention has been paid to the very significant differences in takeover regulation between the two most prominent practitioners of hostile takeover, the United Kingdom and the United States. In the UK, defensive tactics by target managers are prohibited, whereas in the United States, Delaware law gives managers a good deal of room to maneuver. We examine the evolution of the two regimes from a public choice perspective, and argue that the differences between the two countries is influenced by differences in the mode of regulation - that is, by who it is that does the regulating.

Keywords: take-over regulation, John Armour, David Skeel, hostile take-overs, U.S., UK, corporate governance, supply side, competitive federalism, policy, legislation, defensive tactics, poison pills, modes of regulation, litigation, financial performance, hostility,share ownership, self-regulation,comparison

JEL Classification: G28, G34, G38, K23, K42

Suggested Citation

Armour, John and Skeel, David A., The Divergence of U.S. and UK Takeover Regulation. Regulation, Vol. 30, No. 3, Fall 2007; U of Penn, Inst for Law & Econ Research Paper No. 08-24. Available at SSRN: https://ssrn.com/abstract=1025986

John Armour (Contact Author)

University of Oxford - Faculty of Law ( email )

Oriel College
Oxford, OX1 4EW
United Kingdom
+44 1865 286544 (Phone)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

David A. Skeel Jr.

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-573-9859 (Phone)
215-573-2025 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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