Corporate Governance and Merger Activity in the U.S.: Making Sense of the 1980s and 1990s

46 Pages Posted: 21 Feb 2001

See all articles by Bengt R. Holmström

Bengt R. Holmström

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2001

Abstract

This paper describes and considers explanations for changes in corporate governance and merger activity in the United States since 1980. Corporate governance in the 1980s was dominated by intense merger activity distinguished by the prevalence of leveraged buyouts (LBOs) and hostility. After a brief decline in the early 1990s, substantial merger activity resumed in the second half of the decade, while LBOs and hostility did not. Instead, internal corporate governance mechanisms appear to have played a larger role in the 1990s. We conclude by considering whether these changes and the movement toward shareholder value are likely to be permanent.

Keywords: Corporate Governance; Stock Options; Mergers and Acquisitions

JEL Classification: D2, G3, L2, L5

Suggested Citation

Holmström, Bengt R. and Kaplan, Steven Neil, Corporate Governance and Merger Activity in the U.S.: Making Sense of the 1980s and 1990s (February 2001). MIT Dept. of Economics Working Paper No. 01-11. Available at SSRN: https://ssrn.com/abstract=261112 or http://dx.doi.org/10.2139/ssrn.261112

Bengt R. Holmström (Contact Author)

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Steven Neil Kaplan

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