Reviving the Market for Corporate Control
Changes in corporate control-through mergers, takeovers, acquisitions, divestitures, and the like-enhance shareholders' value. They allow the businesses to be transferred to the control of new owners who can put business assets to work more ef...
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1999/09/2531452/reviving-market-corporate-control http://hdl.handle.net/10986/11463 |
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okr-10986-114632021-04-23T14:02:55Z Reviving the Market for Corporate Control Leechor, Chad CORPORATE CONTROL MERGERS TAKEOVERS DIVESTITURE SHAREHOLDERS INDEBTEDNESS STOCK PRICES GOVERNANCE MONOPOLIES LOBBYING AUCTIONS AUDITORS BANKRUPTCY BID BIDDERS BOARDS OF DIRECTORS BORROWING BUYOUT SPECIALISTS CAPACITY BUILDING CAPITAL GAINS COMMERCIAL FIRMS COMMON CONNECTED LENDING CONNECTED PARTIES CONTROL IMPEDIMENTS CONTROL SHARE CONTROL TRANSACTIONS CORPORATE CONTROL CORPORATE FINANCE CRIMINAL SANCTIONS DEBT DEPOSITS DISCLOSURE ECONOMIC STRUCTURE ECONOMIES OF SCALE EMERGING MARKETS FIXED COSTS FOREIGN SHAREHOLDERS LARGE SHAREHOLDERS LAWS LEGISLATION LITIGATION MERGERS MONOPOLIES OIL PRODUCERS PROFITABILITY REORGANIZATION SECURITIES SHAREHOLDERS STOCK STOCK PRICES TAKEOVER TRANSPARENCY WEALTH Changes in corporate control-through mergers, takeovers, acquisitions, divestitures, and the like-enhance shareholders' value. They allow the businesses to be transferred to the control of new owners who can put business assets to work more efficiently. In most countries, however, the market for corporate control is significantly restricted by anti-takeover laws and business practices used to entrench management, such as poison pills, heavy debt, pyramid schemes, and cross-holdings of equity. The key to overcoming these obstacles is to restructure incentives-by requiring business groups to disclose intercorporate ownership and banks to limit connected lending, by ensuring that bankruptcy law allows effective transfer of control, and by removing regulatory barriers to takeovers. Many studies of mergers, takeovers, acquisitions, and divestitures have confirmed that these control transactions generally maximize shareholders' value (Jensen and Ruback 1983). The gain in value is most visible in target firms' stock prices following announcements of takeover attempts or merger agreements. Even in the most advanced markets, where control transactions are common, stock prices increase 20 to 30 percent on average, depending on the type of transaction (Jarrell, Brickley, and Netter 1988). This gain represents one part of the increased business value that the acquirer is prepared to share with the target firm. 2012-08-13T15:08:23Z 2012-08-13T15:08:23Z 1999-09 http://documents.worldbank.org/curated/en/1999/09/2531452/reviving-market-corporate-control Viewpoint. -- Note no. 191 (September 1999) http://hdl.handle.net/10986/11463 English Viewpoint CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Viewpoint Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
CORPORATE CONTROL MERGERS TAKEOVERS DIVESTITURE SHAREHOLDERS INDEBTEDNESS STOCK PRICES GOVERNANCE MONOPOLIES LOBBYING AUCTIONS AUDITORS BANKRUPTCY BID BIDDERS BOARDS OF DIRECTORS BORROWING BUYOUT SPECIALISTS CAPACITY BUILDING CAPITAL GAINS COMMERCIAL FIRMS COMMON CONNECTED LENDING CONNECTED PARTIES CONTROL IMPEDIMENTS CONTROL SHARE CONTROL TRANSACTIONS CORPORATE CONTROL CORPORATE FINANCE CRIMINAL SANCTIONS DEBT DEPOSITS DISCLOSURE ECONOMIC STRUCTURE ECONOMIES OF SCALE EMERGING MARKETS FIXED COSTS FOREIGN SHAREHOLDERS LARGE SHAREHOLDERS LAWS LEGISLATION LITIGATION MERGERS MONOPOLIES OIL PRODUCERS PROFITABILITY REORGANIZATION SECURITIES SHAREHOLDERS STOCK STOCK PRICES TAKEOVER TRANSPARENCY WEALTH |
| spellingShingle |
CORPORATE CONTROL MERGERS TAKEOVERS DIVESTITURE SHAREHOLDERS INDEBTEDNESS STOCK PRICES GOVERNANCE MONOPOLIES LOBBYING AUCTIONS AUDITORS BANKRUPTCY BID BIDDERS BOARDS OF DIRECTORS BORROWING BUYOUT SPECIALISTS CAPACITY BUILDING CAPITAL GAINS COMMERCIAL FIRMS COMMON CONNECTED LENDING CONNECTED PARTIES CONTROL IMPEDIMENTS CONTROL SHARE CONTROL TRANSACTIONS CORPORATE CONTROL CORPORATE FINANCE CRIMINAL SANCTIONS DEBT DEPOSITS DISCLOSURE ECONOMIC STRUCTURE ECONOMIES OF SCALE EMERGING MARKETS FIXED COSTS FOREIGN SHAREHOLDERS LARGE SHAREHOLDERS LAWS LEGISLATION LITIGATION MERGERS MONOPOLIES OIL PRODUCERS PROFITABILITY REORGANIZATION SECURITIES SHAREHOLDERS STOCK STOCK PRICES TAKEOVER TRANSPARENCY WEALTH Leechor, Chad Reviving the Market for Corporate Control |
| relation |
Viewpoint |
| description |
Changes in corporate control-through
mergers, takeovers, acquisitions, divestitures, and the
like-enhance shareholders' value. They allow the
businesses to be transferred to the control of new owners
who can put business assets to work more efficiently. In
most countries, however, the market for corporate control is
significantly restricted by anti-takeover laws and business
practices used to entrench management, such as poison pills,
heavy debt, pyramid schemes, and cross-holdings of equity.
The key to overcoming these obstacles is to restructure
incentives-by requiring business groups to disclose
intercorporate ownership and banks to limit connected
lending, by ensuring that bankruptcy law allows effective
transfer of control, and by removing regulatory barriers to
takeovers. Many studies of mergers, takeovers, acquisitions,
and divestitures have confirmed that these control
transactions generally maximize shareholders' value
(Jensen and Ruback 1983). The gain in value is most visible
in target firms' stock prices following announcements
of takeover attempts or merger agreements. Even in the most
advanced markets, where control transactions are common,
stock prices increase 20 to 30 percent on average, depending
on the type of transaction (Jarrell, Brickley, and Netter
1988). This gain represents one part of the increased
business value that the acquirer is prepared to share with
the target firm. |
| format |
Publications & Research :: Viewpoint |
| author |
Leechor, Chad |
| author_facet |
Leechor, Chad |
| author_sort |
Leechor, Chad |
| title |
Reviving the Market for Corporate Control |
| title_short |
Reviving the Market for Corporate Control |
| title_full |
Reviving the Market for Corporate Control |
| title_fullStr |
Reviving the Market for Corporate Control |
| title_full_unstemmed |
Reviving the Market for Corporate Control |
| title_sort |
reviving the market for corporate control |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/1999/09/2531452/reviving-market-corporate-control http://hdl.handle.net/10986/11463 |
| _version_ |
1764416824957468672 |