Takeover and Monitor under External Corporate Control
نویسندگان
چکیده
We study how both external corporate governance factors and internal corporate governance factors jointly affect the large shareholder’s takeover or monitor decision. The large shareholders monitor the management and have option to takeover the firm. External corporate governance forces impose stealing costs to the manager. In equilibrium, large shareholder’s takeover or monitoring decision, takeover premium, manager’s stealing strategy and the firm values are determined endogenously. We find that both the internal and external control factors have important effects on agency cost and strongly affect the takeover decision. Our results are also robust in the presence of managerial defense and when the market is dynamic.
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