Market for corporate control
- Market for corporate control
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The market for corporate control is a description of the role of equity markets in facilitating corporate takeovers first put forward in an article by HG Manne, ‘Mergers and the Market for Corporate Control’.[1] According to Manne,
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The lower the stock price, relative to what it could be with more efficient management, the more attractive the take-over becomes to those who believe that they can manage the company more efficiently. And the potential return from the successful takeover and revitalization of a poorly run company can be enormous. |
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In this way the market for corporate control could magnify the efficacy of corporate governance rules, and facilitate greater accountability of directors to their investors.[citation needed]
See also
Notes
- ^ (1965) 73 Journal of Political Economy 110
References
- HG Manne, ‘Mergers and the Market for Corporate Control’(1965) 73 Journal of Political Economy 110
- D Scharfstein, 'The Disciplinary Role of Takeovers' (1988) 55 Rev Econ Stud 85
External links
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