Business, Management and Accounting
7 years ago

Corporate takeovers benefit shareholders and drive competition for management rights.

Journal of Financial Economics
The market for corporate control
Michael C. Jensen, Richard S. Ruback

Paper Summary

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The market for corporate control is a place where companies compete to manage resources. Takeovers benefit target firm shareholders without harming bidding firm shareholders. The gains from takeovers don't come from market power. Except for actions that block potential bidders, managerial actions related to corporate control generally don't hurt shareholders.