The Political Economy of Takeover Statutes

The effects of takeover threats on shareholders and firm value

We study the role of takeover threats as a corporate control mechanism using [Aghion, P., Tirole, J., 1997. Formal and real authority in organizations. Journal of Political Economy 105, 1–29] model of formal and real authority. Shareholders do not monitor the manager’s actions since ownership is widely dispersed. A corporate raider may monitor and step in if a profit opportunity exists. In our ...

Competition for Corporate Charters and the Lesson of Takeover Statutes

The Political Economy of the Market for Corporate control in France and the Hamstrung Harmonisation

This paper focuses on the EU Takeover Directive and the impact of its transposition into French law. Takeover regulation is employed as a test case in assessing the importance of the EU in inducing harmonisation within European varieties of capitalism. French outcomes diverge from EC aspirations for greater clarity and uniformity. Heightened uncertainty and differentiation exacerbate problems o...

Citizens United, Independent Expenditures, and Agency Costs: Reexamining the Political Economy of State Antitakeover Statutes

We test the agency theory of corporate political activity by examining the association between the legality of independent expenditures and antitakeover lawmaking in theUSstates. Exploiting changes in state law regarding the use of corporate independent expenditures in the pre-Citizens United era, we estimate that a state is more likely to pass antitakeover statutes that entrench management whe...

Is there discretion in wage setting? a test using takeover legislation

Anecdotal evidence suggests that uncontrolled managers let wages rise above competitive levels. To test this belief, we examine the wage impact of antitakeover legislation passed throughout the 1980s in many states. Since many view hostile takeovers as an important disciplining device, these laws, by reducing takeover threats, potentially raised managerial discretion. If uncontrolled managers p...