Hostile–vs.–white‐knight bidders

We examine the hypothesis that white knights enter control contests to spend free cash flow instead of paying it out to shareholders. Tobin's q is used to measure management's inclination to invest in negative NPV investments. We find that historically, white knights have over‐invested and their acquisition of the target is one more negative NPV investment. Alternatively, hostile bidders’ past investment decisions have increased shareholder wealth. Furthermore, white knights’ returns upon the announcement of their bid have a significant negative relationship with free cash flow, implying that their bid reveals information about white knights management's investment decisions. Copyright © 1999 John Wiley & Sons, Ltd.     

‘New Keynesianism’: Will the Unions Like the S.D.P. Cure?

Professor James Mead's proposals to induce the emergence of the economy from stagflation by imposing 'not quite compulsory' wage restraint neglect the power of the unions to ignore it. Government courts of arbitration would be unable to maintain their independence in face of union pressure. And they would not gather sufficient information about the state of the continuously changing economy to make accurate and impartial decisions.