Takeovers and stockholders: winners and losers
Article Abstract:
The evidence that takeovers do not benefit shareholders of acquiring firms is substantial. One explanation for the existence of negative returns can be traced to the agency relationship between acquiring firm managers and their shareholders. Since much managerial remuneration is tied to firm size, corporate acquisition is one method by which management can gain from exploiting this relationship. Negative returns (on average) to acquiring firm shareholders also open the possibility that aggregate returns (target plus acquirer returns) from the takeover process may be zero or even negative. This would contradict the widely held belief that takeovers are wealth creating. A compilation of historical data on returns to acquiring firm shareholders and manager remuneration support this hypothesis. Finally, additional regulation in the market for corporate control is not the appropriate policy response to takeover abuses. Rather, the solution lies in making corporate boards of directors more responsive to the concerns of their shareholders. (Reprinted by permission of the publisher.)
Publication Name: California Management Review
Subject: Business, general
ISSN: 0008-1256
Year: 1987
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Why investors value multinationality
Article Abstract:
The degree to which investors value multinational corporations is proportional to the value of the securities of those firms as affected by their spending on R&D and advertising, but multi-nationality itself does not have an impact. This supports the internalization theory which states that high investor value and increased direct foreign investment occurs when multinationals enhance their value by internalizing markets for intangible assets including good production skills, patents, marketing skills, management abilities, or consumer goodwill. The value of these intangible assets increases in proportion to the scale of the organization's markets.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1991
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Your ownership: to help you stay out of trouble
Article Abstract:
A firm's articles of incorporation or corporate bylaws, or partnership agreement in the case of partnerships, often specifies many 'ownership rights', and such documents should be reviewed to determine what corporate actions can be taken with and without shareholder approval. Stockholders have basic rights to protect their position of percentage ownership from dilution and vote on mergers and other fundamental corporate changes. In addition, stockholders may have other rights. Article examines issues involving boards of directors, voting, and stock classification.
Publication Name: The Business Owner
Subject: Business, general
ISSN: 0190-4914
Year: 1993
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