The Market for Corporate Control: The Scientific Evidence
Richard S. Ruback
Harvard Business School
Michael C. Jensen
Social Science Electronic Publishing (SSEP), Inc.; Harvard Business School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)
Journal of Financial Economics, Vol. 11, pp. 5-50, 1983
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.
Number of Pages in PDF File: 62
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.
Date posted: August 31, 2002