Stock Market Prices and the Market for Corporate Control

88 Pages Posted: 20 Aug 2015 Last revised: 3 Sep 2015

See all articles by John Armour

John Armour

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

Brian R. Cheffins

University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)

Date Written: July 2, 2015

Abstract

The manner in which hostile takeovers have historically been executed has just begun to receive serious academic attention. Similarly, while the literature on the accuracy and determinants of share prices is voluminous, there has been little systematic historical analysis of when and how modern standards of share price efficiency took shape. This article addresses both subjects in depth to ascertain the extent to which developments in the market for corporate control may have been associated with, or facilitated by, developments in stock market efficiency. We identify potential linkages between hostile control transactions and stock market pricing and explore these linkages empirically with a new hand-collected dataset of control contests occurring between 1900 and 1965. We show that while the evolution of acquiror tactics in control contests was plausibly linked in some circumstances to changes affecting the manner in which shares were priced other factors have to be taken into account to explain how the market for corporate control developed over this period.

Keywords: tender offer; market for corporate control; proxy contest; stock market efficiency; control contests

JEL Classification: G14, G34, K22; N21; N22

Suggested Citation

Armour, John and Cheffins, Brian R., Stock Market Prices and the Market for Corporate Control (July 2, 2015). University of Illinois Law Review, 2016, Forthcoming; ECGI - Law Working Paper No. 298/2015; Oxford Legal Studies Research Paper No. 47/2015. Available at SSRN: https://ssrn.com/abstract=2646778

John Armour (Contact Author)

University of Oxford - Faculty of Law ( email )

St Cross Building
St Cross Road
Oxford, OX1 3UL
United Kingdom
+44 1865 281616 (Phone)

HOME PAGE: http://www.law.ox.ac.uk/people/john-armour

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/about-us/people/john-armour

European Corporate Governance Institute (ECGI) ( email )

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

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

Brian R. Cheffins

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom
+44 1223 330084 (Phone)
+44 1223 330055 (Fax)

European Corporate Governance Institute (ECGI)

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

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