Do Hostile Takeovers Improve Performance? |
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| Authors: | Julian Franks Colin Mayer |
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| Institution: | Julian Franks is Professor of Finance and Director of the Institute of Finance and Accounting at London Business School. Colin Mayer is Deputy Director, (Academic) at Oxford University's School of Management Studies. This article summarises research published in the Journal of Financial Economics (1996). |
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| Abstract: | This article challenges the conventional wisdom that hostile takeovers - or threats of them - act as a discipline on managers of poorly performing firms. It raises two questions. If takeovers do not assist in the restructuring of poorly performing firms, then how is control exerted? And, conversely, if poor performance before the bid is not the main factor associated with hostile takeovers, what is? In a final section, the authors raise some policy issues which emerge from the long research programme summarised in the earlier part of the article. |
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