Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
884551 | Journal of Economic Behavior & Organization | 2007 | 16 Pages |
Abstract
It is generally assumed that a well-developed market for corporate control results in a takeover threat that disciplines management. We study the effects of a larger market for corporate control and show that an increase in the number of potential raiders of a firm may decrease the probability of a takeover. In turn, the weakened takeover threat results in weaker managerial incentives. In equilibrium, this implies lower managerial effort and therefore a lower ex ante value of the firm.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Linda A. Toolsema,