This paper, which was prepared for a University of Illinois College of Law symposium
honoring Prof. Larry Ribstein, examines the origins of the market for corporate control
in the United States. The standard historical narrative is that the market for corporate control took on its modern form in the mid-1950s with the emergence of the cash tender offer.
Using hand-collected data from newspaper reports, we show that there in fact were numerous instances during the opening decade of the 20th century where a bidder sought to obtain voting control by purchasing shares on the stock market. Moreover, share-forshare exchange tender offers were used to make takeover bids as early as 1901, and cash tender offers can be traced back to at least the mid-1940s. We argue that the way in which cash tender offers came to dominate the market for control after World War II can be explained primarily by changes in the pattern of share ownership and of the opportunities bidders had for ?managing? the stock price of intended targets.
We study how transparency affects takeover probability and hence stock returns. If transparency helps acquiring firms to determine target value or synergy, then it can increase takeover vulnerability. Estimated takeover probabilities produce...Read more
This paper investigates whether non-executive directors associated with good (bad) board decisions are subsequently rewarded (penalized) in the market for directors. This question is addressed by assessing whether the post-acquisition performance...Read more
At the core of agency problems in widely held firms is a dual coordination failure: Dispersed shareholders neither share in the cost of governance interventions (ex post free riding) nor sell shares unless the price at least matches the...Read more
This paper, which forms part of the first phase of the New Special Study of the Securities Markets Project, explores how globalization has affected the operation of securities markets and the challenges this poses for their regulation. In Part I...Read more