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On Takeover Law and Regulatory Competition

29 Pages Posted: 24 May 2002 Last revised: 10 May 2009

Lucian A. Bebchuk

Harvard Law School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR) and European Corporate Governance Institute (ECGI)

Allen Ferrell

Harvard Law School; European Corporate Governance Institute (ECGI)

Abstract

This article defends, and further develops, our earlier work on regulatory competition and takeover law. We have argued that competition for corporate charters provides incentives to states to protect incumbent managers from hostile takeovers, and that the empirical evidence is consistent with this account. To improve the performance of regulatory competition, we have put forward the possibility of choice-enhancing federal intervention; such intervention would expand shareholder choice, and encourage states to become more attentive to shareholder interests, without imposing any mandatory arrangements. Replying to Jonathan Macey's response to our work in this issue of the Business Lawyer, we show that none of his claims weakens our analysis.

The earlier work which we defend and develop in this paper is "A New Approach to Takeover Law and Regulatory Competition," 87 Virginia Law Review 111-164 (2001). In a related piece ("Federal Intervention to Enhance Shareholder Choice," 87 Virginia Law Review 993-1006 (2001)), we reply to a critique of our work by Steve Choi and Andrew Guzman.

Keywords: Delaware, incorporations, corporate charters, regulatory competition, corporate governance, managers, shareholders, takeovers

JEL Classification: G30, G38, H70, K22

Suggested Citation

Bebchuk, Lucian A. and Ferrell, Allen, On Takeover Law and Regulatory Competition. Business Lawyer, Vol. 57, pp. 1047-1068, 2002; Harvard Law and Economics Discussion Paper No. 363, 2002. Available at SSRN: https://ssrn.com/abstract=313828 or http://dx.doi.org/10.2139/ssrn.313828

Lucian A. Bebchuk (Contact Author)

Harvard Law School ( email )

Cambridge, MA 02138
United States
617-495-3138 (Phone)
617-812-0554 (Fax)

HOME PAGE: http://www.law.harvard.edu/faculty/bebchuk/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) and European Corporate Governance Institute (ECGI)

Allen Ferrell

Harvard Law School ( email )

Griswold 303 1525 Massachusetts Avenue
Cambridge, MA 02138
United States
(617) 495-8961 (Phone)
(617) 495-1110 (Fax)

European Corporate Governance Institute (ECGI)

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

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

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