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The Market for Corporate Control: The Scientific Evidence

62 Pages Posted: 31 Aug 2002  

Richard S. Ruback

Harvard Business School

Michael C. Jensen

SSRN; Harvard Business School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Accounting & Control Unit

Abstract

This paper reviews much of the scientific literature on the market for corporate control. The evidence indicates that corporate takeovers generate positive gains, that target firm shareholders benefit, and that bidding firm shareholders do not lose. The gains created by corporate takeovers do not appear to come from the creation of market power. With the exception of actions that exclude potential bidders, it is difficult to find managerial actions related to corporate control that harm shareholders. Finally, we argue the market for corporate control is best viewed as an arena in which managerial teams compete for the rights to manage corporate resources.

Keywords: Corporate control, managing corporate resources, control rights, target firms, takeover market, wealth effects of takeovers, stockholder returns, returns to targets, returns to bidders, antitrust, takeover regulation, manager-stockholder conflict(s), antitakeover amendments.

Suggested Citation

Ruback, Richard S. and Jensen, Michael C., The Market for Corporate Control: The Scientific Evidence. Journal of Financial Economics, Vol. 11, pp. 5-50, 1983. Available at SSRN: https://ssrn.com/abstract=244158 or http://dx.doi.org/10.2139/ssrn.244158

Richard S. Ruback

Harvard Business School ( email )

Boston, MA 02163
United States
617-495-6422 (Phone)
617-496-8443 (Fax)

Michael C. Jensen (Contact Author)

SSRN ( email )

7858 Sanderling Road
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305 675-3166 (Fax)

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Harvard Business School ( email )

Soldiers Field
Negotiations, Organizations & Markets
Boston, MA 02163
United States
617-510-3363 (Phone)
305-675-3166 (Fax)

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=6484

National Bureau of Economic Research (NBER) ( email )

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European Corporate Governance Institute (ECGI) ( email )

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

Harvard University - Accounting & Control Unit ( email )

Soldiers Field
Boston, MA 02163
United States

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