Implicit contracts, takeovers and corporate governance: in the shadow of the city code

Simon Deakin, Richard Hobbs, David Nash and Giles Slinger

Working Papers from Centre for Business Research, University of Cambridge

Abstract: This paper offers a qualitative, case-study based analysis of hostile takeover bids mounted in the UK in the mid-1990s under the regime of the City Code on Takeovers and Mergers. It is shown that during bids, directors of bid targets focus on the concerns of target shareholders to the exclusion of other stakeholder groups. A review of the case studies five years on find that, almost withouth exception, mergers led to large-scale job losses and asset disposals. However, almost none of the bids were considered by financial commentators, at this point, to have generated shareholder value for investors in that merged company. While there is therefore clear evidence that the Takeover Code is effective in protecting the interests of target shareholders, the implications of the Code for efficiency in corporate performance are much less certain.

Keywords: hostile takeovers; stakeholding; implicit contracts; breach of trust (search for similar items in EconPapers)
JEL-codes: D23 G34 K22 K31 (search for similar items in EconPapers)
Date: 2002-12
New Economics Papers: this item is included in nep-cfn, nep-ind and nep-law
Note: PRO-2
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:cbr:cbrwps:wp254

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